What Are Government Loans?

Executive summary by Gaurav Bhola

Government loans are mortgage loans that are insured or guaranteed by the federal government. In many instances consumers seek government loans because they do not qualify for a conventional loan.A conventional loan is simply any loan that is not a VA loan, FHA loan, RHS loan, state or local government loan.

The following three federal agencies provide government loans. Also, the homes purchased must meet certain standards to apply.

U.S. Department of Veterans Affairs (VA) Loans

• Qualified military veterans are able to purchase a home under $203,000 with no down payment.

Federal Housing Administration (FHA) Loans

• FHA does not provide home loans.
• FHA provides the mortgage lender insurance that will compensate the lender for any losses in case of default on the loan
• Very low down payment on your home. (between 3-5% based on the FHA appraisal value)
• Maximum loan limit depends on the average cost of living in your local area
• Flexibility in calculating household income to payment ratios

Rural Housing Services (RHS)

• RHS does not provide mortgages, it simply guarantees mortgage loans made to rural residents
• Low interest rate loans with no down payment to low to moderate income rural residents
• Loans have lower closing costs than with conventional loans

State and Local Loan Programs

• Special programs available for first-time home buyers.
• Loan offers first-time home buyers with low down payments or lowered interest rates if specific income guidelines are met
• Certain state or local agencies provide assistance with down payments and closing cost

Finding Free Government Loans

Executive summary by John Robert

All free government loans and grants have a system they go by. Free government grants and loans have to pass through many hands before they can finally get to yours.

The federal government gives us free government loans and grants through 26 different federal agencies. Each of the 26 federal agencies has 15 different ways that it hands out free grants. Lastly the money passes through hundreds of state and local agencies where you actually obtain the free government loan or grant from.

There are three sources for finding free government loans and grants. The U.S. government’s grant.gov website is a good place to start. You can also search the internet for free government loans and grants. The last and most important source for identifying free government loans is the government’s own Catalogue of Federal Domestic Assistance. The CFDA provides a listing of free government loans and grants and other types of financial assistance.

Please check out our Guides To Obtain Grants For Housing, Grants For Business or Grants For School, Student or College here. You may want to check out individual grants here.