FHA, Fannie Mae & Freddie Mac —
The basics of government mortgage loans When it comes time to buy a home, determining which loan is best for you can feel overwhelming. There are many loan options available, some of which are known as government loans, or government-backed loans. Many buyers take comfort in opting for these types of loans — known as FHA, Fannie Mae, or Freddie Mac loans — as they offer terrific benefits for both first-time homebuyers and seasoned homebuyers. Here is an overview of what these types of government mortgage loans offer borrowers: FHA — FHA stands for Federal Housing Authority, and as its name implies, these loans are insured by the U.s. Federal Housing Authority, and are issued by federally qualified lenders. FHA loans appeal to many buyers, particularly first-time homebuyers Copyright Featured Agent Magazine
because they typically offer less stringent qualification requirements, and often allow borrowers to make a smaller down payment. For example, FHA loans may be available to homebuyers with less than perfect credit. In fact, many people can secure FHA loans as long as their credit score is above 500. However, the down payments required for an FHA loan are contingent upon credit scores. Borrowers with a credit score of 500-579 will need at least 10% down in order to obtain the loan. Buyers with a credit score of 580 or more may be eligible for down payments as low as 3.5%. Other benefits afforded by FHA loans include allowing borrowers to use down payment assistant programs, or 15
