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Things can get a little confusing when applying for a mortgage. There are just so many different loan options, how are you supposed to know which is best for you? To top it off, sometimes people qualify for government-insured loans, which are a little different than your typical loan. To put it bluntly, government-insured loans are loans that are backed by the government as a way to guarantee repayment to the bank, in case the person taking out the loan ends up defaulting on their mortgage payment. A conventional loan can sometimes be out of the question for people if they don’t have the income for it or are having issues with credit, but government-insured loans don’t have to deal with that. Here are the 3 government-insured loans:

VA Loan

A VA loan is an option available to veterans, active-duty military, Reservists, and surviving spouses of veterans. These lines are quite popular and often believed to be one of the best loans available due to having no private mortgage insurance and no down payments as well as being flexible with credit scores.

FHA Loan

FHA loans are rather popular with first-time homebuyers which has often caused it to be called the “first-time homebuyer” loan. Unlike the VA loan which is only for veterans and others involved in the military, anybody can apply for an FHA loan as long as they’re using it to purchase or refinance a primary residence and meet various other requirements. The thing is, not every lender is able to offer these loans, as lenders must be approved by the FHA in order to do so. FHA loans are a little more flexible when it comes to credit and down payment than many other loan types, only requiring a 3.5% down payment.


The big reason you’d be applying for a USDA loan is that you’re looking to buy a house in a smaller community. The main thing needed to be eligible for these loans is for the population in the area you want to buy your home to be under a certain amount, which qualifies the area as “rural”, even if it’s not a rural area at all. Most USDA loans don’t even have down payment requirements, meaning you only need to have the money for closing costs and other prepaid expenses put away. It’s also possible for the seller of the home to pay up to 6% of these expenses, meaning this loan can be great for those trying to not spend too much at closing.