A gold key on a gold house key chain laying on top of a home loan program agreement.

Home Loan Programs: Here Are Your Options

For almost as long as there have been home loans, there are home loan programs to help potential and first-time home buyers purchase the home of their dreams. The recent decline in economy and, particularly, in the real estate market has resulted in the development of many more home loan programs that offer specific assistance to certain groups.

FHA Mortgage Loans

FHA loans (Federal Housing Administration) are government-insured loans administered by the U.S. Department of Housing and Urban Development (HUD). Although FHA loans are for anyone who meets the eligibility requirement, they’re typically used by first-time home buyers because of their low down payments, lower interest rates and more lenient credit score requirements.

Homeowners can also do refinancing through FHA. FHA loans must meet the appraisal requirements and come with a cap on how much the individual can borrow. The FHA offers several programs for home buyers.

  • Zero Down Payment Act

    Potential home owners who meet eligibility requirements for FHA loans but have difficulty coming up with down payments may get assistance through this program. This program is for first-time home buyers. It differs from other down payment assistance programs in that, instead of providing the money for down payments, the FHA will charge the borrower a higher insurance premium to make up the difference in not having the down payment.

  • Energy Efficient Mortgage

    Also offered through the FHA, this program provides financing for home owners who want to lower their energy costs through the addition of energy-efficient products to their current or soon-to-be home. There is no down payment required for this assistance program.

VA Loans

VA loans are government-guaranteed loans offered through the U.S. Department of Veterans Affairs, and they are available for veterans and their spouses. The eligibility guidelines are more lenient than traditional mortgage loans and VA loans require no down payment. Like the FHA loan, VA loans have a cap on how much can be borrowed. Although lenders provide the initial financing, the VA guarantees payment if the borrower defaults on the loan.

RHS Loans

The U.S. Department of Agriculture Rural Development Housing & Community Facilities (RHS) is a home loan program that offers home financing for low-income individuals who are farmers or live in rural areas. In addition to offering financing for home purchases, the RHS also has programs for home repair or renovation.

ADDI Program

First-time home buyers who are interested in purchasing single family housing and have difficulty coming up with down payments may be able to get assistance from the American Dream Down Payment Assistance Initiative program. This program provides assistance for the purchase of a single family home, condominium, or a manufactured home. The borrower must have an income of less than 80% of the area’s median income.

Local Government Programs

Each state offers different home loan programs. They vary from community to community and may include low or no down payment, as well as low interest rates. Although the financing comes from lenders, the programs are often government-sponsored. Potential homebuyers should check with their local government offices to learn of any available home loan programs.