Loans can be a struggle to deal with, especially in the case that you have an unstable financial situation. There are many loan options that are available. But, it could be a little challenging to keep track of all of them. You can find personal loans, standard loans, small business loans, and more! However, you should know that there are also loans that the Federal Government backs or even provides directly. Through these government loan options, you can find that they are easier to get and can be more affordable since some come with lower interest rates and other benefits! This article will let you know about different federal loan opportunities.
What You Need To Know About Government Loans
Typically, government loans mean loans that the Federal Government funds. These loan opportunities offer more flexibility for lenders. This allows you to receive a government loan easier than a loan from a private lender. Additionally, there are several types of loans that the government backs or provides directly that can help specific financing needs.
Different Government Loans That Could Interest You
If you are considering receiving a loan, then you should really think about getting a government loan. It would not harm you to see what available loan options you can get. There are a variety of different loans available that can help with plenty of different financing needs.
Housing Loan Options That Are Available
Government home loans offer a full range of assistance for households to receive their forever home or even improve their existing home. Since affordable homes are hard to come by, government home loans will provide assistance for you to locate a home that is affordable. Experts suggest that households should only use 30% of their income on housing costs. Unfortunately, most American families spend more than that. Thankfully, you may be able to locate a government housing loan that could get you on the right path toward affordable housing.
FHA Loans
Federal Housing Administration (FHA) loans have been offering help to American families since 1934. The main aim of this type of loan is to provide assistance for people to purchase homes at an affordable price. You will find that FHA loans are hassle-free to be eligible for and they allow down payments as low as 3.5%. However, for individuals that are not in a great place financially and have a low credit score of 500 to 579, their minimum down payment requirement would be 10%.
USDA Home Loans
The United States Department of Agriculture (USDA) loans provide assistance to people that are interested in living in rural areas across the country. In order to qualify, you must meet certain eligibility requirements. If you are eligible for a USDA loan, then you could receive a down payment option as low as $0.
Home Improvement and Repair Loans
The USDA manages home improvement and repair loans. This program offers grants or loans to low-income American homeowners who are interested in fixing their homes.
Veteran Loans
The Department of Veteran Affairs (VA) offers its own set of government-backed loans that are designed to help veterans who need financing.
VA Home Loans
VA loans are loans that provide assistance to military veterans; these loans offer affordable financing to buy a home for veterans. Qualifying applicants can be eligible for a $0 down payment and low-interest rates.
Veterans’ Life Insurance Policy Loans
This is something you might know, but, if you have a permanent life insurance policy with one of these insurance plans, then you could be eligible for a Life Insurance Policy Loan. These life insurance plans include:
- Service Disabled Veterans Insurance (S-DVI)
- National Service Life Insurance (NSLI)
- United States Government Life Insurance (USGLI)
- Veterans Reopened Insurance (VRI)
- Veterans’ Special Life Insurance (VSLI)
These insurance plans offer veterans the opportunity to have access to up to 94% of the value of their policy through a loan. Additionally, people can surrender your policy for the cash value instead.
Interest Rate Reduction Refinance Loan (IRRRL)
An Interest Rate Reduction Refinance Loan (IRRRL) provides assistance to individuals who already got a VA-backed home loan. With an IRRRL, you can be able to get your loan refinanced at a lower interest rate. This will help you reduce your payments every month. But, you should know that each IRRRL can have different terms depending on the lender.
VA Cash-Out Refinance
The VA Cash-Out Refinance program is a very important option among veterans. With this program, you can utilize the equity in your home to your maximum advantage. When you use this option, you can get your existing VA-backed home loan refinanced with different terms. You also have the opportunity to:
- Take out cash from your home’s equity
- Refinance your non-VA home loan into a VA-backed home loan
Native American Direct Loan (NADL)
This government loan program is created to provide assistance for Native American veterans that are searching to purchase, enhance, or build a home. The home should be located on Federal Trust land. If you want to get a Native American Direct Loan, then you will be required to fill out a qualifying certificate with your tribal organization. Additionally, you will need to prove that you have a qualifying credit score to be eligible for the loan.
Education Loan Options That You Can Consider
There are a few different types of federal loan opportunities that can help with financing higher education. These options include:
Direct Unsubsidized Loans
When students need financing but are not facing financial hardship then they should consider this student loan opportunity. Undergraduate, graduate and professional students can benefit from this financing option. However, it is important to note that there are limits to this option. Not everyone has the same annual limits! However, the maximum is $20,500 for graduate and professional students.
Direct Subsidized Loans
This education financing opportunity is only meant for undergraduate students that are dealing with financial hardship. That’s because this option comes with a variety of benefits. One of the biggest benefits is the fact that the government will pay the interest of the loan while the recipient is in school at least half-time as a student. The government will also pay interest during a 6 month grace period after the student leaves school!
Direct PLUS Loans
Not every student can rely on their family for assistance but some students can. That is why the parents of undergraduate, graduate and professional students can choose this loan. This loan opportunity is different from direct subsidized and direct unsubsidized student loans because it requires a credit check in order to qualify. These are known as Direct Parent Plus loans. However, there are Direct Grad loans that are designed specifically for graduate students and professional students. This loan opportunity comes along with higher fees and interest rates!
Direct Consolidation Loans
Many people are in school for years. Over that course of time, students may find themselves dealing with multiple federal student loans. That is where direct consolidation loans come into the picture. These loans can give borrower’s the ability to consolidate their multiple loans into one loan. This gives people the opportunity to get a lower monthly payment and even less interest paid over the lifetime of the loan!
What if You Are Not Eligible for a Government Loan?
If you cannot be eligible for a government loan, then you can think about getting a personal loan from a private lender. Banks can provide some information and guidance that can help you to locate a loan that could help you finance your needs. Additionally, they can provide information on the application process and qualifying criteria. You can also figure out what loan options you are pre-qualified to receive.
Pre-qualifying for a loan does not call for concern. That’s because you are not required to hand in a hard inquiry on your credit! Regardless, still make sure that you are careful when you are reviewing loan options, though. You want to make sure you understand the terms clearly.
The Final Verdict
There are many loan options available for your current situation, but you need to know where to look. You might not know this, but there are loans that the Federal Government backs or even provides directly. There are a variety of different loans that can help people in different ways. That is why it is important to review your options.