Your search results
Posted by Payman Shilian on September 8, 2022

West LA & Westwood Real Estate Market


Some people may find it harder to qualify for conventional mortgages. Luckily for them, government backed loans exist for this reason, so borrowers who need funding can achieve their goal of homeownership. The Federal Government secures all government loans. In some cases, you can apply online; in other cases, they work with approved lenders to insure the loan rather than fund it. If, for any reason, a borrower were to default on a mortgage that the government secures, they would end up repaying the lender. Like conventional loans, every lender has its application process for taking out a government backed loan that you will need to follow.

Type of Government Housing Loans

A government backed loan is considered a non-conforming loan, which means it is outside the standards of Fannie Mae and Freddie Mac. The Federal Government doesn’t directly fund loans, and to gain access to government mortgage loans, you will need to work with an approved bank or an online lending service. Some of the most common loans today are FHA, VA, and USDA.

FHA Loans

Federal Housing Administration (FHA) loans are mortgage loans with lower down payments and credit requirements, which make them more accessible to more people. For example, to qualify for an FHA loan in Los Angeles County, you need a minimum down payment of 3.5% with at least a 580-credit score. The maximum debt-to-income for an FHA loan is 43%, but there are exceptions for solid credit scores or extra cash reserves. There is also an upfront mortgage insurance premium that must be paid and an annual mortgage insurance premium.

VA Loans

VA loans, which the US Department of Veterans Affairs backs, are only eligible for veterans, active-duty military, National Guard personnel, military reserves, and qualifying surviving spouses. There is no minimum credit score to qualify. However, most lenders may require at least a 580 credit score. VA loans typically don’t need any down payment; however, both FHA and VA loans require the home buyer to pay closing costs.

USDA Loans

USDA loans are government backed loans that can help you buy a home in a suburban or rural area. USDA loans also do not require a down payment, but there is a credit score of at least 640 to qualify. The home you want to buy must also be in an eligible rural or suburban area. Home buyers can check the potential home eligibility on the USDA Website.

Which Type of Mortgage Loan Is Best for Me

Many options are available for those who cannot qualify for a conventional loan. For example, a 20% down payment for many potential buyers may not be feasible. However, these government housing loans can be a perfect option for some as they accept lower credit scores that do not qualify for conventional loans. They can also be great options for first-time home buyers. Talk with a lender and see what government backed loans you may qualify for. Never be afraid to ask questions, as the right lender will be more than happy to inform you of all your options.

The Shilan Group is a leading Compass realtor, and we can help you find the best government backed loan for your needs. To learn more about these loans, contact our expert team today!

westwood market real estate 2024

Westwood Market: 2024 Q1 Real Estate Check-In

Get the inside scoop on Westwood's housing market! Our Q1 2024 report reveals essential data, the latest sales trends, and expert forecasts to guide your real estate decisions. Buy, sell,...

Compare Listings


Fill out the form below and a representative will be in touch with you shortly.