Government Mortgage Programs

The U.S. government has established mortgage insurance programs through 3 different agencies, the FHA,
VA, and RHS. They generally exist in order to provide greater access to homeownership opportunities and 
residential development, because it is typically very easy to qualify and become approved. The agencies do 
not actually provide funds for lending, they simply insure the mortgages and act as a sponsor to participating 
lenders.
 
With less risk of default due to these government mortgage programs, lenders are more likely to approve 
applicants such as low income families, those with bad credit, or first-time homebuyers.

FHA - Federal Housing Authority

This agency, part of the U.S. Office of Housing and Urban Development (HUD), insures mortgage loans
made by FHA approved lenders. This is the largest mortgage insurer in the world. The FHA is unique
because it is the only government agency that produces enough income to support itself and requires
no taxpayer revenue. Benefits of the FHA program are low down payments, low closing costs, and
easy qualification. Down payments as low as 3% are commonly acceptable to the FHA. Subject properties
must be approved by the FHA.

VA - Department of Veterans Affairs

These loans exist so veterans are able to gain home financing under more ideal conditions such as
with low or no down payments, and low interest rates. Veterans must have served a certain length of time
on active duty in one of the military branches, without dishonorable discharge. The subject properties
must be appraised by the VA.

RHS - Rural Housing Service

These loans are insured by the U.S. Department of Agriculture (USDA), and help low to moderate income 
borrowers to finance rural property. They normally require a low or no down payment.