How the Government Can Help You Purchase a Home

purchasing a home

Homes are expensive, and they are getting more expensive every year. Currently, the median price of homes is around $347,000. If you consider mortgage rates, the possible increase from auction, and the maintenance, the home you purchase today, can easily cost you $500,000 in the future.

That’s a price that many Americans can’t pay in their lifetime if you consider that the average household income in the US is only around $68,000. Thankfully, there are some ways the government can help alleviate this burden from its citizens. Here are some ways the government can help you purchase your home today.

Guaranteed Mortgage

Many homeowners can struggle to purchase a home through cash. It’s much harder to save up the money you need to purchase a home right away. This is why competent mortgage loans are available to people. Despite this, some can’t apply for one, and some can but can’t pay off the mortgage in the long run. This is where a guaranteed mortgage comes in.

A guaranteed mortgage is a kind of mortgage where a third-party (guarantor) buys off part of the debt from the mortgage. If the owner defaults, the guarantor is to take responsibility for the borrower if they default. The usual guarantor for this kind of mortgage is the government. The Federal Housing Administration (FHA) is the department you should visit to apply for this kind of loan. If you’re a veteran, you can also ask the Department of Veteran Affairs (VA) for a guaranteed mortgage.

This particular mortgage can help you in various ways. The first way is that it helps you get a mortgage despite having a low credit rating or none at all. If you don’t know, people who do not have any credit rating or those who don’t have any credit rating cannot apply for a loan, or when they do apply, they are usually denied. Now that you have a guarantor, your credit rating doesn’t mean as much because there is someone else (the government) who can pay for you in cases that you default. Another way it helps you is that it helps you keep your money safe. Those in the low to middle-income level can have a hard time saving money. Now that you have a guaranteed mortgage, that money stays safe even when you default on your mortgage.

new home

Paying for Down Payment

A home’s down payment is usually 25% of the home’s overall cost. If we consider the median price of homes today ($347,000), 25% of that is $86,000. This is quite expensive, and it is one reason why people in the US struggle to own a home. But first-time buyers or those within the low to middle-income level can ask for the government to pay for the down payment of their home.

Various government programs can help you pay for the down payment of your home. If you’re part of the low-income level, you can apply for a grant. Grants are the best way of paying for the down payment of your home because you never have to pay for it back. It can be quite hard to apply for one or to be chosen in the pool of many thousands, but it’s worth giving a try.

Another way is to apply for the Chenoa Fund, which is available in every state in the US except in New York. The Chenoa Fund can help you pay for the down payment of your home or at least a percentage of it. There are various qualifications for it, so you have a higher chance of getting accepted there.

There are many more programs out there that can help you pay for the down payment of your home. Feel free to ask the FHA for the list of programs you qualify for.

Low-income House Loans

Lastly, if you want a loan or a mortgage from the government with little to no interest, there are various programs you can apply for: HomeReady and Home Possible loans offer mortgages at meager down payment prices (usually 3%). The USDA allows you to get a loan to purchase your home without any down payment with 100% financial backing. Lastly, the Veteran’s Association gives military personnel a chance to purchase a home without the need for a down payment or a credit score. These are all viable options for anyone living in the low-income level of the US.

The government provides many programs for Americans to purchase their home. These programs can usually help you manage your finances while also giving you the chance to live inside the home you need. Furthermore, these programs can drastically decrease mortgage and loan payments, making them more affordable for you and your family in the future.

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