How three Government loans can make you a future homeowner


If you have ever thought about becoming a homeowner but got discouraged due to the high initial costs associated with owning a home, you’ll be happy to hear about the following three government loans. These loans have guarantees by the Federal Housing Administration (FHA) home loans, the Department of Veteran Affairs (VA) home loans, and the U.S. Department of Agriculture (USDA) home loans. 

Because all three of these government home buying programs enjoy a U.S. government guarantee, they are more lenient in their eligibility requirements due to their protection from financial loss if the borrower ends up defaulting on their loan. However, each one of these loans has a target borrower, which must meet its eligibility requirements. 

FHA Home Loans

Home loans guaranteed by the FHA are the most commonly used type of government loan, mainly because eligibility requirements for these loans are more accessible. Although once an applicant meets these specific eligibility requirements, they will take advantage of some fantastic benefits. 

So what are these eligibility requirements? They go as follows: a credit score of 580 with a 3.5% down payment. If the applicant’s credit score is between 500 and 579, their down payment would be 10%, which is still lower than the 20% conventional loan standard. An applicant must have a debt to income ratio of less than 43%, and it is required for them to have mortgage insurance.  

Once the applicant meets all these eligibility requirements, they can enjoy benefits like lower closing costs, low monthly mortgage payments, the ability to borrow more than the property is worth to fund the remodeling and repairs to the property. Additionally, suppose the applicant is unable to make the low down payment requirement. In that case, the FHA also offers down payment assistance grants whose cost will be added to the mortgage, making it so that applicants can buy a home will little to no initial costs. 

USDA Home Loans

Guaranteed by the U.S. Department of Agriculture, USDA home loans make homeownership possible for lower-income applicants. These loans do this by offering great benefits, including a no down payment requirement, competitive interest rates, and lower monthly mortgage payments.         

Eligible applicants must have an income lower than 115% of the median income for the county, and a credit score of at least 640, with a stable and dependable income. Additional requirements include being a U.S citizen or legal resident, a 12-month history of no late payments, and the property bought with the loan serving as the applicant’s primary residence. Properties bought with these loans must be a modest single-family home in an eligible rural area.

Additionally, if the applicant has no established credit, they can still qualify for the loan, although they would need to go through a credit verification through alternative sources, including rent payments, utility payments, and insurance payments. The specifics of these requirements vary depending on the lenders.  

VA Home Loans

Considered by most real estate experts as the best government guaranteed home loans, VA home loans serve as one of the most significant benefits of serving in the military. VA home loans are for veterans, active duty service members, and eligible spouses and have, since their creation in 1944, helped more than 25 million veterans become homeowners. 

VA home loans offer some of the most significant benefits out of any government loan; these include zero down payment requirements, lower monthly mortgage payments, low average interest rates, the removal of mortgage insurance premiums, and no prepayment penalties. Additionally, as of 2020, borrowers are no longer required to adhere to county-based loan limits unless the applicant is a second-time borrower, in which case they must meet loan limits which in low-cost counties is $548,250.  

However, before enjoying VA loans, applicants must meet VA home loan eligibility requirements which include meeting military service, income, credit score, and property requirements.   


Most Americans want to become homeowners, and government loans are perfect for individuals who see the 20% down payment commonly required by conventional loans as too much. Millions of people have benefited from using government-guaranteed home loans, so start your homeownership journey and apply for a home loan today.    

Author Bio: Phil Georgiades is the CLS for FedHome Loan Centers, a government-sponsored brokerage specializing in first-time buyer home loans. He has more than 22 years of experience working in the real estate industry.