FHA Loans

• A number of loan programs are administered through the Federal Housing Administration (FHA), a division of the United States Department of Housing and Urban Development. Because the FHA offers some assurance to lenders that their risk will be reduced and their funds recouped even if the borrower fails to fully repay the loan, lenders are often more comfortable offering favorable terms to home buyers, even those with troubled credit. There are a number of FHA loan programs, including reduced-interest 30-year fixed rate mortgages, and all FHA mortgage programs are backed by the Department of Housing and Urban Development. Some buyers may not qualify for FHA loans, however, as several strict guidelines---including debt-to-income ratios, down payment amounts, and maximum purchase amounts---apply to all FHA programs. To apply for FHA loans, prospective borrowers need only inquire about the programs from their local lending institution.
  
  

VA Loans

• Active and retired military personnel, veterans, and other service members may qualify for a series of special government programs offered through the United States Veterans Administration. Among these programs is the VA Loans offer, a program that rewards prospective home buyers for serving their country with favorable mortgage terms. Thirty-year fixed mortgages are among the most popular loans secured through the VA Loans program, and many of these loans come with no down payment requirement, reduced interest rates, and relaxed qualification criteria. Prospective borrowers must have served in some branch of the United States military, and VA loans are typically limited to amounts of $203,000 or less. Because the VA Loans program works through private lending institutions rather than directly issuing loans, borrowers need only request a 30-year fixed VA Loan through their local lender to take advantage of the program.
  
  

Conforming (Freddie Mae and Freddie Mac) Loans

• Most borrowers who take out 30-year fixed loans are able to take on a loan that conforms to the typical terms and conditions set forth by Fannie Mae and Freddie Mac. Because these loans must conform to several federal guidelines, they are known as "conforming loans." Fannie Mae and Freddie Mac are publicly held finance companies that purchase mortgage securities from banks, granting the bank an instant return on their investment and greatly reducing the lender's risk. Because of the reduced risk, many banks are willing to extend more-favorable terms on conforming loans, with the most common (and most beneficial for borrowers) perk being reduced interest rates. To qualify for, or conform with, a 30-year fixed conforming loan, borrowers must meet basic credit and income requirements, borrow less than the maximum amount (as of August 2009, this amount was $417,000), and be purchasing a Fannie Mae and Freddie Mac-approved property.