Money Smarts Blog
What are government mortgage loans?
Jun 1, 2017 |
Did you know that IHMVCU has a government loans division in our mortgage department? Well, we do. Now, I know what you’re thinking . . . what does “government loans” even mean and why do I care?
Government mortgage loans are subsidized by the federal government, which allows your lender (we hope that’s us!) to make home ownership possible for those who might not otherwise be able to afford it, like individuals with low income, first time home buyers and individuals with poor credit.
There are three different types of government home loans: VA, FHA and USDA.
What are VA home loans?
VA loans are an option for qualified veterans, and they’re guaranteed at closing by the United States Department of Veteran Affairs. Why choose a VA loan over a conventional mortgage? If you’re eligible for a VA loan, you benefit from the ability to finance 100% of the cost of your new home (so no down payment) without paying private mortgage insurance (PMI).
FUN FACT: Did you know that 75% of IHMVCU government loan production comes from VA loans? It’s important to IHMVCU to honor those who serve our community and our country by assisting them in the rewarding experience of home ownership, and we’re glad we’ve been able to help so many Quad Cities veterans become homeowners.
What are FHA loans?
FHA loans are guaranteed at closing by the Federal Housing Administration, and are available to both qualified first-time home buyers and families who have had to overcome credit challenges. They’re perfect for buyers who want to own a home, but may not fit into the requirements of a conventional mortgage.
FUN FACT: IHMVCU partners with Plaza Home Mortgage to underwrite and close all of our government home loans. Plaza Home Mortgage is based out of Itasca, IL and our main account representative, Jennifer, often visits the IHMVCU Mortgage Center in Davenport.
What are USDA home loans?
USDA loans are available for qualified members in USDA-approved rural areas and are guaranteed by the United States Department of Agriculture at the time of closing. USDA home loans provide 100% financing and the least expensive up-front funding fee of any other government loan. IHMVCU serves many rural communities – from Monmouth to Prophetstown in Illinois, and DeWitt to Burlington in Iowa – so it’s a great home loan option for members in those areas.
FUN FACT: USDA financing is the only type of government loan financing that allows you to add your closing costs (up to the appraised value of the home) onto your base loan amount at the time of closing.
We believe every IHMVCU member should benefit from a personalized experience when purchasing a home. No two members are alike, so it wouldn’t make sense to offer only one type of financing! Offering government loan options has allowed us to help hundreds more members with specialized loan options to meet their individual needs.