Despite the recent economic crisis and the real estate nightmare that many Americans are currently going through, owning your home continues to be the quintessential American Dream. It is a sign of prosperity, financial security, and stability – as much as it is a satisfying experience. A house or an apartment is a great investment that has many financial advantages and brings with it substantial tax benefits. Interest paid on a a home loan and real estate taxes are among the very few major federal tax deductions. In times when the stock exchange seems a treacherous trap for your money, owning a home is the primary way many people build wealth.
The FHA has helped low income families realize the American Dream since 1934 (image: Library of Congress)
In a way, the down payment is where it all begins – and ends for those who cannot scrape together the 20% traditionally considered necessary to finance a home. However, low down payment mortgages are becoming more and more popular and are increasingly supported by government programs that aim to boost the faltering real estate market and help more Americans. Chief among these are so-called mortgage insurances that back the homebuyer in case of foreclosure. The Federal Housing Administration (FHA), which requires home buyers to provide an effective down payment of less than three percent to qualify but limits the loan amount according to geographic area, has almost no restrictions on who can apply. The Department of Veterans Affairs (VA) or the U.S. Department of Agriculture’s Rural Housing Service (USDA-RHS) on the other hand, are more restrictive and specialized.
For more, see the homepage of the Department of Housing and Urban Development.
FHA loans can be trusted, wish we had more gov-funded programs…