Mortgage Minute - Acronyms

Whether you find them in a text message, reading a report, or — might I say — choosing a mortgage loan, acronyms are everywhere. Some of the most frequently used ones in the mortgage world are FHA, VA, and RD.

FHA stands for Federal Housing Administration which is affiliated with HUD (another acronym which references the Department of Housing and Urban Development). An FHA loan is a government-backed mortgage that is insured by the Federal Housing Administration. FHA loans allow for lower minimum credit scores, lower down payments, and they typically have a lower interest rate than that of a conventional loan.

Another frequent loan type is the VA loan. VA stands for Veterans Affairs. This type of loan helps service members, veterans, and eligible surviving spouses become homeowners. With VA loans, no down payment is required. They typically have lower interest rates and closing costs than conventional financing. These loans also do not require private mortgage insurance. VA loans do have a funding fee. This fee can be financed or even waived in certain circumstances, such as when a Veteran is considered disabled by the VA.

Last is the RD loan. RD stands for Rural Development, which is affiliated with the USDA (United States Department of Agriculture). I know, another acronym. RD loans are designed to help low to moderate income individuals and families in rural areas obtain homeownership. With this program, no down payment is required. However, there is a guaranteed fee that can be financed. With Sanders County and most of our surrounding counties being rural, this is typically a very popular option in the area.

Each program listed above has its own unique set of qualification standards. Please talk to your lender for details.

Michael Scharfe has been a lender at First Security Bank for nine years. Reach him at [email protected].