Opportunities

    Government Loans to Consider

    By 5 Mins Read

    When you think of getting some more money, what comes to mind? Is it getting another job? What about getting a loan? When most people think of loans, they usually think of traditional ones from private lenders. However, there are plenty of lenders to consider. The federal government is one of them. Financing opportunities through the federal government can make it easy for people to handle big purchases.

    Different Federal Loans to Benefit From

    A few government loans to consider include:

    The federal loans we are going to cover in this article are both home related loans, as well as education loans. However, they aren’t all the same!

    FHA Home Loans

    These mortgages are a favored government loan for many homebuyers, including first-time buyers. There is a good reason for that! It is because the requirements have a lower barrier of entry when compared to some other home loans. Some of the requirements that make this mortgage more accessible include:

    • Lower down payments
    • Lower credit score requirement

    For example, potential buyers with a credit score of 500-579 are required to put down 10%. However, a homebuyer with a slightly higher credit score of 580 or above is only required to put down an initial payment of 3.5% of the purchasing price! Finally, FHA Home Loans are insured by the Federal Housing Administration (FHA). Only approved lenders are permitted to give out this type of mortgage.

    Single Family Housing Repair Loans and Grants

    This loan option is for homeowners who want to make updates or repairs to their homes. One advantage is that what you receive as a grant does not need to be paid back. Another benefit of this program is that the interest rate on the loan amount has a fixed rate of just 1%! Applicants that qualify can receive up to $50,000 total. You can get up to $40,000 from loans and $10,000 in grants. This loan program is also known as the Section 504 Home Repair Program. It is provided by the United States Department of Agriculture (USDA).

    Single Family Guaranteed Loan Program

    This loan is also known as the Section 502 Guaranteed Loan Program. This type of mortgage is also provided by the USDA. Borrowers that go with this loan can benefit from:

    • No down payment requirements
    • No minimum credit score requirements

    However, this loan program isn’t available to everyone. To qualify for this loan, a household must meet certain income requirements. The way the program works is by providing a loan guarantee to approved lenders. With this loan guarantee, lenders can give loans to families in need with reduced risk.

    VA Home Loans

    Qualifying individuals are given these mortgages through private lenders, while the United States Department of Veterans Affairs (VA) guarantees them. There are quite a few advantages that recipients can benefit from with this program! However, keep in mind that not every private lender shares the same loan conditions. Those who can qualify include active service members, veterans, and eligible spouses. According to VA guidelines, these groups can benefit from no required down payment and competitive interest rates. In addition to that, the criteria for potential homebuyers are less difficult to meet. Finally, this program does not require its recipients to have private mortgage insurance (PMI).

    Direct Subsidized Loans

    This loan program is different from the others we have discussed. This is because these loans are intended for undergraduate students pursuing higher education. College is a huge expense, with tuition and books costing thousands of dollars per semester. Fortunately, the government offers various loans to students in need of financial support. Direct Subsidized Loans are one of them! This loan program is provided by the United States Department of Education (ED). With this type of loan, the government will cover interest! However, this is only under certain circumstances. This includes:

    • While the student is enrolled in school for a specific period of time
    • Throughout the 6 month grace period or period of deferment

    It is important to keep in mind that there are limitations to how much a student can borrow. That amount is different for each student, depending on their personal circumstances. However, this opportunity is available to students who:

    • Can demonstrate a financial need
    • Are enrolled in school full-time or half-time

    Students can apply for this loan opportunity by completing a Free Application for Federal Student Aid (FAFSA). Students should get any needed assistance from their financial aid office at school!

    Direct Unsubsidized Loans

    Direct Unsubsidized Loans are similar to subsidized loans in that they are both provided by the ED. They also have in common that they are available to students. However, this type of loan is different because it is offered to a wider range of students. In addition to undergraduate students, the following can receive an unsubsidized loan:

    • Graduate Students
    • Professional Students

    As stated above, students can apply for this loan opportunity by submitting a FAFSA! There is a limit to how much the loan amount can be with a direct unsubsidized loan. A student can receive up to $20,500 per school year.

    Bottom Line

    There are times in our lives that are more stressful than others. Pursuing a higher education or buying a home are some of those times. Most people believe that going to college or purchasing their first home are simply dreams that they can’t reach. However, there are various government opportunities that can make that dream a reality! The federal government offers both loans and grants to homebuyers and students. Not everyone can qualify for every opportunity. However, those that can qualify for these options can benefit from lower down payments, lower credit score requirements, and more! These opportunities may be the sign you were needing to shoot for the stars and go after your dreams!

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