The Three Government-Backed Home Loan Programs

WRITTEN BY The Three Government-Backed Home Loan Programs

In today’s mortgage marketplace there are two basic types of home loans: conventional and government-backed. Conventional loans are those typically underwritten to Fannie Mae and Freddie Mac guidelines while government-backed mortgages carry some level of guarantee to the lender that approved the application. As long as the lender followed proper protocol when underwriting a government-backed mortgage application, the guarantee applies.

These guaranteed loans are those underwritten to VA, FHA and USDA guidelines. Let’s look at these three programs.

VA Loans

VA loans are available to a select group of borrowers. Those borrowers are veterans, active duty personnel with at least 181 days of service, National Guard and Armed Forces Reserve members with at least six years of service and un-remarried surviving spouses of those who have died while serving, or as a result of a service-related injury. The VA loan program is a zero-down product, one of the few zero-down home loans on the market. As it relates to the lender’s guarantee, should the loan go into default – which is rare because the VA loan is one of the highest performing in the industry – the lender is compensated at 25 percent of the loss. This guarantee is financed by what is known as the Funding Fee and for first time VA buyers taking out a 30 year loan and no money down, the fee is 2.15 percent of the sales price which is then rolled into the final loan amount.

FHA Loans

FHA loans have no such restrictions as to eligibility. FHA loans are under the auspices of the Department of Housing and Urban Development, or HUD, and also carry a guarantee to the lender. Should an FHA loan go into default, the lender is compensated for the loss. This compensation is financed with two separate forms of mortgage insurance: an upfront mortgage insurance premium and an annual premium paid in monthly installments. These two fees have varied over the years but today the upfront premium for FHA loans is 1.75 percent of the loan amount when the minimum down payment of 3.5 percent is made and 0.85 percent of the loan amount for the annual premium. The upfront premium is also rolled into the final loan amount.

USDA Loans

The USDA loan is the last of the three government-backed programs and is designed to finance properties located in rural and semi-rural areas. The USDA program is also a zero-down loan and offers a 30 year fixed rate program. There are income limitations with the program and is also dependent upon the number of people living in the household. This program is considered a moderate income program limiting household income to 115 percent of the median income for the area. Properties must also be located in a previously approved geographical area.

Lastly, all three of these programs are designed to finance a primary residence and cannot be used to finance a second home or rental property.



Single Family Home Activity in the Antelope Valley

In the last 24 hours

New Listings …  25
Sold …  18
Pending …  20
Expd/Wthd/Cancld …  18
Price Increases …  01
Price Reductions …  18
Number of listings* …  1675
Average Days on Market …  87
Short sale/pay listings …  12
Equity listings …  1542
Bank owned listings …  17
HUD, Corp, Probate and Auction listings …  61
Days of inventory (at the average rate**) …  41.40
Days of inventory (at yesterdays rate**) …  46.53
Actual Number of days of inventory***  …  152.27

View the last 8+ years of data HERE!


* Count includes all ACTIVE and CONTINGENT MLS listings
** Assuming no future growth or reduction
*** At yesterdays depletion rate (∞ indicates negative depletion,
inventory would not be depleted at this sales rate)

The Smartest Fall Renovations to Make if You’re Planning to Sell Your Home

WRITTEN BY JAYMI NACIRIThe Smartest Fall Renovations to Make if You’re Planning to Sell Your Home

There are a lot of fall renovation tips centered on bring cozy warmth into the home. In fact, we just took a look at some hot trends last week. This week, we’re looking at renovations you can make with equity building in mind, courtesy of Scott McGillivray from HGTV’s Income Property and Moving the McGillivrays.

While some trends carryover, there is some great info here for those who are looking to make some updates to enjoy now, while being able to reap the potential future financial benefits.

Matte appliances

These are a “hot trend of the moment,” said McGillivray. And while he says that he likes how they “lend a luxurious look to the kitchen, and how they look great when paired with neutral colored cabinets,” he still thinks stainless steel is your best bet if you’re looking to sell anytime soon. It’s the “best choice for a long-term return on investment,” he said. While these matte finishes are great of-the-moment looks, I expect they’ll look dated a few years down the road.”

Quartz counters in warm colors

We may be moving away from all that white or counters that look like Carrara marble (only easier to care for). While quartz isn’t going anywhere, McGillivray is seeing a trend toward warmer shades. “Countertops that look like marble will always be in demand because they’re classic, but the tide is slowly turning,” he said. “We are seeing a trend where quartz counters in warm neutrals are in high demand. I think people are trying to get away from sterile looks and really make kitchens homey again.”

Light floors

“Along with the light and airy trend comes a desire for lighter floors,” he said. “Dark walnut and cherry finishes are out, and lighter, blonder woods are in. Similar to kitchen counters, I think the trend will be toward warmer colors rather than cooler colors. But light is definitely the way to go trend-wise.”

Hands-free technology

Smart homes aren’t the way of the future. They’re here, now, and the smarter the home, the more attractive it may be to buyers. “This may seem like old news to the early adopters, but more and more people are starting to embrace hands-free and SMART technology,” he said. “This means that anything in your home that you can command with your voice is going to be super popular.”

Less Serious (and More Fun) Spaces

It’s time to go a little wild with your home—but within reason. “I predict that people are going to stop taking their homes too seriously and have a little bit more fun,” he said. “This means more colors, more patterns and less concern over what’s ‘proper.’ While smart return on investment design decisions should still be made for fixed items in your home, let’s all relax a bit and have a little fun with our furniture and decor this year.”