As the video says, the name is misleading - theyre not loans FROM the VA. The VA - short for US Department of Veterans Affairs - is the Federal military veteran benefit system. The VA administers benefits and services for Servicemembers, Veterans their dependents and survivors. Programs related to home loans are one of their key services. The VA is not a bank; they do not provide home loans themselves. But they do guarantee a portion of home loans provided to veterans and other eligible people by banks and mortgage companies. These guarantees enable lenders to provide more favorable terms. They are are commonly called VA Loans. They cover buying, building, repairing, retaining and adapting homes for personal occupancy by eligible Veterans and survivors.
The video puts this in more visual terms, but 203(b) is the most commonly used FHA program. It offers a low down payment, flexible qualifying guidelines limited lenders fees, and a maximum loan amount. 203(k) loans enable homebuyers to finance both the purchase and rehabilitation of a home through a single mortgage. A portion of the loan is used to pay off the sellers existing mortgage and the remainder is placed in an escrow account and released as rehabilitation is completed. Basic guidelines for 203(k) loans are as follows: The home must be at least one year old. The cost of rehabilitation must be at least $5,000, but the total property value - including the cost of repairs must fall within the FHA maximum mortgage limit. The 203(k) loan must follow many of the 203(b) eligibility requirements. Lenders will know specifics about improvement, energy efficiency, and structural guidelines.
Even though this video simplifies things to help you remember, FHA closing costs are similar to those of a conventional loan, with the exception of an FHA mortgage insurance premium. As of 2013, the FHA requires a single, upfront mortgage insurance premium equal to 2.25% of the mortgage to be paid at the closing (or 1.75% if you complete the HELP program). If the loan is paid off in full within the first seven years, this initial premium may be partially refunded. If your mortgage is longer than 15 years or if you have a 15-year loan with an LTV of more than 90%, you will have to pay an annual premium after closing. This premium is paid monthly.
Loans from FHA-approved lenders (Federal Housing Authority) provide more flexibility than conventional loans. Here are some of the things generally allowed in re-establishing credit via FHA loans: If you went through foreclosure or deed-in-lieu, if 3 years have passed, you may be eligible If you had outstanding tax liens, if youve arranged a repayment plan with Federal (IRS) or state tax authorities, you may be eligible If you have judgements that have been paid, you may be eligible If you went through bankruptcy at least 2 years ago, you may be eligible. For borrowers with unusual credit records — for example, those who prefer paying in cash and carrying no debt — FHA may be an option. Likewise, new or first-time buyers with little established credit should investigate FHA programs for assistance. Talk to an FHA-approved lender to learn more.