CHAPTER 3

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Government-Backed Loans: VA, FHA, and USDA

NOW THAT WE’VE COVERED the conventional lending guidelines, let’s explore the new ways the federal, state, and local governments can help with home loans. Government loans are not made by the government. Rather, they are “guaranteed” by the government. Guaranteed, that is, unless the loan doesn’t meet established lending guidelines. Lenders will approve a government loan individually and can turn around and sell that same loan on the secondary market just like a conventional loan and for the very same reasons.

Unlike conventional loans, government-backed loans are not used for investment purposes ...

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