Government Loans (FHA and VA)
When you’re exploring your home loan options, if you are qualified, you may consider an Glossary Term: FHA (Federal Housing Administration) or a Glossary Term: VA (Department of Veterans Affairs) loan. These programs allow a lower Glossary Term: down payment and Glossary Term: credit score when compared to Glossary Term: conventional loans.
Glossary Term: FHA loans
are helpful for applicants who don’t have a 20% down payment saved or who need more flexible income or credit requirements. Bank of America, an FHA-approved lender, offers FHA loans that are insured by the Federal Housing Administration (FHA)Footnote 1
There are some differences between FHA and conventional loans. For example, there’s a maximum loan amount, which varies depending on where the home is located.
Also, FHA loan programs typically require you to pay both an upfront mortgage insurance premium (UFMIP) and a monthly mortgage insurance premium (MIP). You’ll need to factor that amount in when you set your Glossary Term: budget.
Glossary Term: VA loans are offered by VA-approved lenders like Bank of America, and are insured by the Department of Veterans AffairsFootnote 2. To qualify, you must be a current or former member of the U.S. armed forces or the current or surviving spouse of one. These loans can help reduce your down payment requirement, sometimes to zeroFootnote 3. They may also help you get a lower Glossary Term: interest rate on your loan. However, there are limits on the available loan amount. If you believe you may qualify for a VA loan, be sure to tell your lender, so you can explore your options together.
Is FHA or VA the right loan for you?
Traditional home lending requirements aren’t always easy for everyone to meet, so access to more flexible qualification requirements can be very helpful to some homebuyers. FHA or VA loan programs could help you get a mortgage. But keep in mind that, while these programs can help you get into the home you want, it’s up to you to ensure that the monthly home payment you commit to is one that you can comfortably afford. No matter which type of loan you apply for, you’ll still want to work through the numbers with your lender to make sure you’re prepared for a rewarding long-term homeownership experience.
Finally, some lenders participate in affordable housing assistance programs that could help borrowers with modest incomes choose from flexible, low down payment options, take advantage of down payment assistance, and/or use Glossary Term: gift funds from friends and family towards a down payment. Ask your lender if you qualify for these types of products and programsFootnote 2.
(Please note: Bank of America offers FHA and VA refinance loans to existing Bank of America home loan customers only.)