Why More Home Buyers Are Choosing Government-Backed Financing

Blog posted On March 06, 2025

More and more lately, home seekers are turning to government-backed loans for their home financing. According to HousingWire, FHA Loans accounted for 24% of primary home purchases in 2024, with VA Loans making up 10%. These types of loans have lower down payment qualifications — in some cases, 0% down — so it’s not surprising that future homeowners are taking advantage of these programs. Below, we’ll go over the type of government loans that we offer, created to offer affordable homeownership options for hopeful buyers.

Advantages of Government-Backed Mortgages

There are multiple benefits associated with government loans, which often provide capital for those who may not qualify for a loan from a private lender. Between loosened qualification criteria and extra incentives, let’s take a look at some key advantages:

• Lower down payment requirements
• Flexible credit score conditions
• Potentially reduced interest rates
• No mortgage insurance premiums for VA and USDA Loans
• Can provide relief from natural disasters
• Improve the overall economy and quality of life of American citizens
• Boosts innovation and entrepreneurship

Now, we’ll go over the main government loans available. Do you qualify for one of the loans below?

VA Loans

• Backed by the U.S. Department of Veterans Affairs
• Available to active-duty service members, Veterans, reservists, National Guard, and eligible surviving spouses
• 100% financing
• Does not require mortgage insurance (VA Funding Fee required)

USDA Loans

• Backed by the U.S. Department of Agriculture
• Rural development loan available for designated rural and suburban areas
• Typically available for borrowers who are employed in farmer, rancher, and other rural occupations
• Also offers 100% financing
• 620 minimum credit score
• No mortgage insurance requirement

FHA Loans

• Backed by the Federal Housing Administration (FHA) and the Department of Housing and Urban Development (HUD)
• Down payment requirements as low as 3.5%
• Primary residences only
• 580 minimum credit score
• Multiple specialized loan options beneath the FHA umbrella

FHA 203(k) Renovation Loans

This is an FHA mortgage that combines the costs of a home purchase (or refinance) with the costs of home renovations.

              Limited 203(k)

• NEW $75,000 repair maximum – recently increased from $35,000
• Home must be habitable while undergoing renovations
• No structural changes allowed
• Half payment required when renovations begin, half when they’re finished

              Standard 203(k)

• Home can be uninhabitable during renovations
• Structural changes allowed
• Phased payment schedule

So, are government-backed loans the right move for you and your family? Are you a military member, finally looking to purchase a home with the help of a VA Loan? Or are you looking to buy a fixer-upper home with the help of an FHA 203(k) Loan? Regardless of your own specific situations, we’re here to help. Reach out today if you want to discuss all your possible government loan options and more!

Source: HousingWire, Yahoo! Finance, Investopedia