Despite the fact that there are several home loan options available for homebuyers in Texas, many fail to take the benefit of some of the most beneficial Texas home loan programs such as the VA home loans, FHA loans, USDA mortgage loans and more. Instead, they opt for the conventional loan programs that are less beneficial and have lesser features as compared to the ones just mentioned. One of the reasons for home buyers failing to take the benefit of these loans is their lack of awareness. In this blog post, we discuss the three most beneficial home loan types that buyers must consider at the time of applying for a home loan.
FHA loans
FHA loans are funded by private lenders, however, they are backed by the Federal Housing Authority. As the loans are insured by the government, lenders have relaxed qualification criteria for giving out these loans to home loan borrowers. Here are some of the benefits of taking an FHA home loan.
- Down payments as little as 3 percent as compared to the traditional loans that require a down payment between 5 to 10 percent.
- The Mortgage Insurance payments that borrowers need to make on a monthly basis are much less as compared to conventional loans.
- As opposed to the 3 percent allowable seller contribution to the closing costs in traditional loans, the FHA loans allow sellers to contribute 6 percent.
VA loans
Just like the FHA, VA loans are also guaranteed by the government. These loans, however, unlike the FHA loans are not offered to everyone. The VA loans are offered only to qualified active service duty members, veterans and their surviving spouses. The benefits of VA loans are as follows.
- There is no down payment applicable in VA loans.
- VA loan borrowers need not pay the private mortgage insurance (PMI) that FHA borrowers pay in the form of Mortgage Insurance Premium (MIP)
- The interest rates are not only lesser than the conventional loans, but they are less than FHA and USDA loans also.
USDA loans
The United States Department of Agriculture is the government organization that partners with lenders to assist rural home buyers get a Texas USDA home loan at competitive rates and easy to replay loan terms. Borrowers who apply for USDA loans get the following benefits.
- Just like the VA loans, USDA loans provide homebuyers 100 percent financing. In other words, they need to make a zero down payment at the time of buying a home.
- USDA loans do require borrowers to make an upfront premium that is 2 percent of the loan amount. The good news, however, is that borrowers can finance the upfront premium, as well.
- As these loans are backed by the USDA, certain borrowers with a blemished credit history may also apply for it. Similarly, borrowers with short credit history may use their rents, utility bill payments, and others to satisfy the credit based lending criteria of the lenders.
