What are Housing Loans?
Housing loans are loans geared to help individuals in many circumstances purchase or rehabilitate personal homes. Most of these loans actually come from the private lending sector. The government provides a loan guarantee that they will cover the loan if the borrower fails to repay. That guarantee gives lenders the incentive to lend money at lower rates and in situations that they are unlikely to otherwise. Some programs are open to most people at some point in their lives. Other programs focus on assisting particular groups such as Native Americans, veterans, or those in rural housing. The programs come from various agencies throughout the federal government.
Types of Housing Loans
The federal government has a whole slew of housing loans available. The most basic one is the Basic FHA Insured Home Mortgage program. This program comes through the US Housing and Urban Development agency. The loan comes from a private lender with an FHA guarantee attached. The person taking out the loan must be in a position to make payments and keep the house in good shape. This requires meeting certain income and credit requirements. These requirements are usually less restrictive than what privately backed loans require. Many first time homebuyers find the FHA loan a good way to enter the housing market because it has a low down payment requirement. For veterans, the VA Loan program offers even better terms for active and retired members of the military.
For those that live in rural areas, housing loans can come through the Rural Housing Loans programs. These programs focus on helping individuals and families with low to moderate-income levels. These programs help with buying, building, or rehabilitating a private home in an eligible rural area. The borrower must meet certain income and credit requirements. Some loans are direct while others are from private lenders with a government guarantee. Those in rural housing situations have a couple of other related programs to consider. The Housing Repair Loans and Grants program helps very low-income homeowners to repair and improve their homes. The Farm Labor Housing Loans and Grants focus on building and repairing housing for farm labor.
For those interested in rehabilitating homes, the Home Rehabilitation Mortgage Insurance program may be of interest. These housing loans allow homeowners or homebuyers to combine rehabilitation and mortgage costs into a single loan. The home must meet certain guidelines and the homeowner must intend on living in that home for a certain amount of time. It is available to those that already own their homes but need to rehabilitate. A similar program is the Property Improvement Loan Insurance program. This program focuses on home improvements instead rehabilitations.
For Native Americans, the Indian Home Loan Guarantee program is an option. This program focuses on providing Native Americans access to affordable and safe housing. The program is open to those with low to moderate income that meets certain income and credit requirements. The individual must be a member of a federally recognized tribe or an Alaskan native. These loans are also available to housing authorities on reservations or other designated areas. The borrower must have the ability to pay the loan back and have the funds for a 2.25% down payment.
In times of disaster, the SBA has authority to issue loans to individuals for home repair and rebuilding. These loans are the Home and Property Disaster Loans. The home must be in a designated disaster area. There are loans for personal property as well such as clothing, automobiles, and furniture. For those interested in manufactured housing, there are a couple of housing loans to consider. The Manufactured Home Loan Insurance program offers lending guarantees through the FHA. The Combination Mortgage Insurance for Manufactured Home and Lot is another one available through the FHA.
How to Apply for Housing Loans
In order to apply for FHA loans, you need to contact an FHA approved lender to start the process. The FHA does not provide direct loans. They provide a loan guarantee. You can have a house in mind before you start the process or after you start the process. However, to complete the loan process you will need a signed agreement to purchase a home. Once you have that, the lender will start the loan paperwork for that house. Once the lender finds the application complete, he will contact the FHA to send out an appraiser to the home. The appraiser will assess the home's current condition and value. The amount of the loan cannot exceed the appraiser's evaluation. If the lender approves the application, then the final step is signing the loan papers at closing.
The process is very similar with VA loans. You need to find a lender who handles VA home loans. You will need to provide a Certificate of Eligibility from the VA showing you are qualified for this loan program. That comes through the VA. The rest of the process is straightforward. The lender takes the loan application and evaluates it for income and creditworthiness. The amount of the loan cannot exceed the appraised value. If the lender approves the loan, the final process is to sign the loan papers at closing.
For those interested in the Rural Housing programs, the agency of focus is the USDA's Rural Development Division. This loan program comes directly from the government. In order to apply, you need to fill out an application form you can find at the Rural Development website. The loan application is typical in asking for financial information and information on the home in question. The application then goes to the Rural Development Division for approval.
For qualified Native Americans interested in home ownership, one of the programs available is through the US Department of Housing and Urban Development. The process for this is very similar to that of the FHA and VA loans. These loans go through private lenders with review and approval from HUD. For those interested, contact an approved lender and start the process. The application will need approval from the lender and HUD. And it requires approval for income and creditworthiness.
For those that want more information, please visit the following websites:
Grant Application Guides and Resources
It is always free to apply for government grants. However the process may be very complex depending on the funding opportunity you are applying for. Below are some of the published guides that have been helpful to past recipients: