Government Loans

Federal Housing Administration Loans

FHA is the Federal Housing Administration, which provides mortgage insurance for loans that are done by FHA-approved lenders, including single family and multifamily homes. FHA insured loans require very little cash investment to close and are more flexible in regards to the calculations for income and payment ratios. FHA loans require less than conventional loans in order to allow lower and middle-income families the ability to buy homes.

Similar to conventional loans, there are several types of FHA loans, including fixed rate mortgages which have a fixed rate and payment amount throughout the term of the loan and will have no amount due at the end. FHA fixed rate mortgages only require down payments of 3.5% of the total loan amount, which is much lower than that required of a non-FHA fixed rate mortgage. There are also adjustable rate mortgages which fluctuate with interest rates and payment amounts, Jumbo fixed rate mortgages which are for loans over $417,000, and balloon mortgages, which allow smaller monthly payments but require a lump sum due at the end of the term.

Credit requirements for FHA loans are much less strict than those for conventional loans.  The HUD requires borrowers to have a minimum credit score of 640. When analyzing the credit of a borrower, the most useful tool to look at is past credit performance which determines the general approach to credit obligations. If credit history shows continuous late payments, judgments or delinquencies against the borrower there will need to be strong aspects of the loan to back the borrower and get an approval through FHA. Many loan underwriters will ignore minor credit issues that have occurred two or more years ago, yet more major derogatory information will require a written explanation from the borrower explain the delinquencies.

Previous foreclosure and bankruptcy require 1-3 years since the act has occurred. Chapter 13 bankruptcy requires only one year after pay off period maturation before the borrower can qualify. Chapter 7 liquidation bankruptcies require a 2 year time period between the discharges before the borrower can qualify. Borrowers who have foreclosed on a previous residence will require three years before they are able to qualify.

Another type of FHA loan is the 203K program which is a home improvement loan. It is a great option for borrowers who are interested in purchasing a home that needs repairs and updating or if they need more money for repairs on their current home. 203K loans are available to borrowers of all income levels and for those interested in a refinance or purchase. This program can be used three different ways in order to accomplish the improvements necessary on the dwelling. These three ways include:

1. Purchasing a dwelling and the land on which it is located
2. Purchasing a dwelling and moving to a new foundation on the mortgaged property
3. Refinancing existed indebtedness and rehabilitating the current dwelling.

Many lenders have used this program with partnership of state and local housing agencies in order to rehabilitate properties, and have found ways to combine this program with other financial resources to assists borrowers that may not otherwise be eligible, such as borrowers in lower income communities.

Download our PDF guide, “FHA Loans, Still Working When Others Might Now”

VA Mortgages

Created in 1944 the VA Loan is used to provide housing and assistance for veterans and their families. With more than 25.5 million veterans and service personnel eligible for VA financing, this loan is has many advantages.

Eligibility for the VA loan is defined as Veterans who served on active duty and have a discharge other than dishonorable after a minimum of 90 days of service during wartime or a minimum of 181 continuous days during peacetime. There is a two-year requirement if the veteran enlisted and began service after September 7, 1980 or was an officer and began service after October 16, 1981. There is a six-year requirement for National guards and reservists with certain criteria and there are specific rules concerning the eligibility of surviving spouses. All veterans must qualify, for they are not automatically eligible for the program.

VA will guarantee a maximum of 25 percent of a home loan amount up to $104,250, which limits the maximum loan amount to $417,000. Generally, the reasonable value of the property or the purchase price, whichever is less, plus the funding fee may be borrowed. The funding fee varies from 2.15% to .50% depending on the down payment percentage and what type of veteran the borrower is. There is no funding fee for any veteran who has a service-connected disability.

To qualify for this program, the borrower must have a minimum credit score of 620 for all purchases and cash-out refinances. An Interest Rate Reduction Refinance requires a minimum credit score of 640. If the borrower is utilizing this program for a purchase or a cash-out refinance than they must occupy the property as their primary residence. There is no down payment required but could be helpful to a borrower looking to reduce their funding fee.

To see if you’re an eligible veteran, you can click on the website below to obtain your certificate of eligibility form.

Download our PDF guide, “Loans for Veterans”

Special Programs for Veterans


USDA Guaranteed Rural Development Mortgages

USDA Rural Housing Development Loans were created by the USDA Rural Development Program for individuals who live within the designated “rural areas” as an option for a loan program that offers certain advantages. Rural Development Guaranteed Housing Financing requires no down payment, is more flexible with the source of funds for closing costs, and with credit score guidelines in comparison to other programs.

To qualify for this program, the borrowers must occupy the property as their primary residence. Only single family properties are eligible. A minimum credit score of 620 is required and the borrowers must have a credit history that indicates a willingness to meet obligations as they become due. Household income from all working adults (age 18 or older) that will reside in the home must not exceed the moderate income limits established for the area in which they are purchasing or refinancing the home.

There is an upfront guarantee fee of 2% that can be financed into the loan and an annual fee of .40% which is collected monthly as part of the mortgage payment just as mortgage insurance is.

To determine if your income or property is eligible for this program, please click on the link below.

U.S. Department of Agriculture Home Loan Program

Own a home in the countryside with out USDA Rural Development Program. If purchasing or refinancing a property in an outlying area appeals to you, Envoy Mortgage’s USDA Rural Development Program is an excellent solution.

Download our PDF guide, “USDA Rural Development Program”


FHA 203K Streamline Loan

Real estate agents and home buyers are scrambling to adjust to today’s real estate market which is filled with foreclosed home that have suffered from disrepair and neglect. Many banks that own these foreclosed properties are unwilling to repair then. As a result, many foreclosed properties do not qualify for traditional loan programs. FHA’s 203(k) loan program provides the funds necessary for both the purchase AND the renovation of a home. The maximum loan amount depends on HUD-determined loan limits which are set on a county by county basis.

Download our PDF guide, “203(k) Streamline”