Loans insured by the Federal Housing Administration (FHA) are a type of federal assistance that allows for people to purchase homes with less stringent lending and down payment requirements. Created by the National Housing Act of 1934, FHA requires only a 3.5% down payment.
FHA loans will have an upfront as well as a monthly mortgage insurance premium for the life of the loan. Credit requirements for FHA are generally more liberal than conventional loans. FHA loan amount maximums are determined by the county the property is located in.
A VA loan is a mortgage loan guaranteed by the U.S. Department of Veterans Affairs (VA). VA loans were designed to offer long-term financing to eligible American veterans or their surviving spouses. The VA direct home loan program supplies home financing to eligible veterans with no down payment.
VA loans have more liberal loan guidelines very similar to FHA loans. VA loans do not have monthly mortgage insurance. The maximum VA loan guarantee varies by county. The maximum VA loan amount with no down payment is usually $424,100, although this amount may rise in certain specified “high-cost” counties.
The United States Department of Agriculture (USDA) offers qualified applicants zero down payment loans in approved rural areas. Unlike other government mortgage loans, the USDA program does not require borrowers to make a down payment. In addition, closing costs can be rolled into the loan, completely eliminating the upfront costs of buying a home. USDA mortgage holders are not required to carry traditional mortgage insurance. A USDA mortgage loan can be used to buy, construct or rehabilitate a home.