When choosing a loan program, it’s important to understand your options. Let’s take a look at two different types of popular government loan programs – FHA loans and USDA loans – and how they compare to one another.
Government mortgages are backed by the government, as their name indicates, meaning that the government ensures repayment to the bank or lender if you happen to default on your mortgage payment. This means that these types of loans often have more flexible qualification requirements that tend to be easier to meet than those of conventional loans, which are not backed by the government.
If you qualify for a government mortgage, there are a few options to choose from – specifically, FHA loans, USDA loans, and VA loans.
Here, we will take a brief look at some of the key features of FHA loans and USDA loans so you can compare and contrast these two options. (VA loans are only available to those who have served in the military, are currently serving in the military, or to surviving spouses of military members. If you think you might qualify for a VA loan, you can find more information about VA loan benefits, eligibility requirements and more here.)
There are some key differences between FHA and USDA loans to carefully consider when working towards an understanding of which loan program is most appropriate for you. Keep in mind that not all borrowers will qualify for both loan programs and not all areas are eligible.
Speaking with a mortgage loan originator will help you to understand what you qualify for. While you may be interested in a government-backed home loan, it may turn out that other loan options, such as a conventional loan, could be the best option for you. Working with a mortgage broker can help you to identify the options you should be strongly considering based on your financial situation, the location where you’re hoping to buy a home, and other factors.
Our team of mortgage professionals would be happy to meet with you and help you understand which mortgage options are best suited to help you purchase a home. As a mortgage broker, we have access to a wide variety of mortgage programs. Working with you, we can determine which option works best based on your financial and home goals, then help you secure a home loan at a competitive rate.
Ready to get the process started? Give us a call today at 518-782-1202 or contact us online to get the conversation started.
Want to learn more about the two mortgage options outlined above? Be sure to check out our Guide to USDA Loans and our Guide to FHA Loans for further information about these two types of home loans.
Editor’s note: This content was originally published in February 2020, but has been updated as of March 2023.