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What are the advantages and disadvantages of government loans?
Thank you for using our 425.com mortgage website. You have requested information on
"What are the advantages and disadvantages of government loans?" There are two main types of government loans: VA, sponsored by the Veterans Administration, and FHA, sponsored by HUD. VA loans are only available to qualified Veterans. Therefore, the glaring disadvantage is that they are not an option for many people. However, if you are eligible for a VA loan they can be a tremendous benefit. VA loans require zero down payment, and require no mortgage insurance even with the minimal down payment. They are currently available only as fixed rates, no adjustable. The mortgages are assumable to qualified future purchasers of your home, which can be a great selling tool in times when interest rates are higher. FHA loans are available to any qualified borrower. An obvious drawback to the program is the paperwork, which is long and detailed. However, a good mortgage lender can walk you through the government forms, making the confusing information easy to understand. FHA loans are great for people purchasing multi-family properties, because the down payment requirement is roughly only 5% of the sales price, even on three and four family units! Furthermore, 93% of the rental income from the units not owner-occupied can be used to help you qualify for the loan. FHA offers both fixed and adjustable rate programs. The adjustable are particularly good, as they offer low yearly and lifetime caps (caps are the amount that the interest rate can change, typically 2%/year for most loans, but only 1%/year for FHA loans).
The loan professional that has made this information available to you
specializes in assisting those individuals with obtaining FHA and VA home loans.
whether for purchase or refinance. Your loan professional in most cases can
advice you on the best approach and help you with your specific loan
requirements. | 
