| A lot of first-time home buyers have questions about | | | | process. |
| low-income home buying programs. So here's an | | | | Federal Housing Authority |
| overview of low-income home buying programs, how | | | | The Federal Housing Authority (FHA) also supports |
| they work, and where you can learn more. | | | | low-income home buying in the U.S. This organization |
| Generally speaking, a low-income home buying | | | | was created as part of The National Housing Act of |
| program is any program that's designed to help home | | | | 1934. The FHA insures mortgages, which helps |
| buyers who may not otherwise qualify for a mortgage | | | | low-income home buyers qualify for mortgage loans |
| loan. | | | | they might not otherwise qualify for. |
| Normally, when you talk about such programs, you're | | | | Learn more at |
| talking about a loan that gets some form of | | | | Rural Housing Authority |
| government backing. In other words, the government | | | | The Rural Housing Authority (RHA) can assist |
| backs or guarantees a loan on behalf of the home | | | | low-income home buyers in certain situations. The |
| buyer who is applying for the loan. This is the essence | | | | RHA is part of the United States Department of |
| of how most low-income home buying programs work. | | | | Agriculture (USDA). Unlike the organizations listed |
| When the government backs a loan for a slightly | | | | above, the RHA actually makes direct loans to home |
| unqualified borrower, mortgage lenders will be more | | | | buyers. They also guarantee loans for home buyers in |
| inclined to loan money to that borrower. The lender is | | | | rural areas. |
| comfortable doing this, because in the event that the | | | | Learn more at |
| borrower defaults on the loan, the government has | | | | Veteran's Administration Home Loans |
| agreed to back it, so the lender would still be paid. | | | | The Veteran's Administration (VA) helps home buyers |
| Fannie Mae | | | | by guaranteeing loans made by mortgage lenders. The |
| Fannie Mae is a shortened version of Federal National | | | | VA does not actually make direct loans. The VA |
| Mortgage Association (FNMA). Congress created this | | | | home loan program is reserved for U.S. military |
| organization in 1938. According to their website, Fannie | | | | veterans and their spouses. To apply to this program, |
| Mae "provides financial products and services that | | | | one must first obtain a Certificate of Eligibility from the |
| make it possible for low-, moderate-, and | | | | VA. The home buyer would then present this |
| middle-income families to buy homes of their own." | | | | certificate to their mortgage lender. |
| Learn more at | | | | Learn more at |
| Freddie Mac | | | | State-Sponsored Programs |
| Freddie Mac is a shortened version of Federal Home | | | | In addition to the federal programs listed above, there |
| Loan Mortgage Corporation. Congress chartered this | | | | are many programs unique to certain states. For |
| organization in 1970. Freddie Mac supports the | | | | instance, the Michigan State Housing Development |
| secondary mortgage market by purchasing residential | | | | Authority "makes low interest mortgage loans available |
| mortgage loans and reselling them to investors (mostly | | | | through [their] network of experienced lenders." Most |
| on Wall Street). This increases the availability and | | | | other states have similar programs, in one form or |
| affordability of home loans for low- and middle-income | | | | another. |
| Americans. | | | | State programs are too numerous to list on this page. |
| Learn more at | | | | To learn more about them, searching online for home |
| As a home buyer, you wouldn't normally deal directly | | | | buying programs in your state. |
| with an organization like Freddie Mac or Fannie Mae, | | | | * You may republish this article online if you retain the |
| but they do have a role in the low-income home buying | | | | author's byline and the active hyperlinks below. |