VA Loans, FHA Loans & Other Federal Mortgage Programs

Gain insight into the Making Home Affordable Act as well as VA loan and FHA loan options

Following the collapse of the housing market, more homeowners are struggling to afford their monthly mortgage payments. To help alleviate some of this stress, the federal government partnered with banks and lending institutions to help guarantee home loans. The goal was to encourage lending while also providing an avenue for cash-strapped homeowners to lower their monthly payments by refinancing or other means. If you're a homeowner in this situation, educate yourself on the details of a VA loan, FHA loan or other home loan modification programs.

Making Home Affordable Act

If you are having difficulty making your mortgage payments, this government program is designed to help you refinance or modify your loans and payments. The Obama Administration created the Making Home Affordable Act in 2009, which offers assistance in a couple different ways:

  • Home Affordable Refinance Program: If your mortgage is owned or backed by Fannie Mae or Freddie Mac and have been unable to refinance because your home dropped in value, this program may be for you. With Making Home Affordable, you may be eligible to refinance into a new mortgage with a lower interest rate.
  • Home Affordable Modification Program: Homeowners who are struggling to make payments because their mortgage has increased or their income has dropped may be eligible for this program. It can help you avoid foreclosure by making your monthly payment more affordable. To qualify, you had to obtain your mortgage before January 1, 2009.

FHA loans

An FHA loan, as it's commonly known, is not actually a loan from the Federal Housing Authority (FHA). Rather, borrowers who have poor credit or limited financial resources can apply for a home loan from a lending institution, and the loan will be insured by the FHA. This can make home ownership possible when it otherwise might not be.

An FHA loan gives the lender more confidence in accepting the risk of issuing a mortgage. This FHA assistance is helpful to the borrower because it may also allow for lower down payments or the ability to refinance your mortgage into one with smaller monthly payments.

VA loans

VA loans are available to veterans of the armed forces. Instituted in what's known as the GI Bill in 1944, these loans were designed to help servicemen find affordable housing after leaving the military. They work in a similar fashion as FHA loans: You still apply for a loan from a lending institution, but it is backed and guaranteed against default by the Veterans Administration (VA). This assistance can result in a low down payment or no down payment at all.

To be eligible, you need to have served a minimum amount of time (the time differs depending on whether it was wartime or peacetime) and left the military under any circumstance other than dishonorable discharge. The VA will back up to 25% of your home loan, maxing out at a little over $100,000. You will need a Certificate of Eligibility from the VA to present to your lender.

Talk to a Citizens Bank lending expert about mortgage programs

To learn more about programs available from Citizens Bank and see if you qualify, talk to a home loan advisor. Call 1-888-514-2300 to get your questions now or to start a mortgage application.

 

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