A mortgage loan provided by the Federal Housing Administration (FHA) can be a good choice when buying a home with poor creditworthiness (bad credit home loans), as FHA lenders have the lightest rating requirements.
Rural borrowers can apply for a mortgage loan directly from the U.S. Department of Agriculture (USDA) or through a USDA-approved lender. These loans are available to low- and middle-income borrowers who live in specific rural areas, usually based on population.
VA loans provide flexible, low-interest mortgages to the U.S. military (active duty and veterans) and their families, supported by the U.S. Department of Veterinary Affairs (VA), no down payment is required nor mortgage insurance, and closing costs are usually limited and can be paid by the seller.
Freddie Mac’s first home buying program, Home Possible, helps buyers buy a home with a very low down payment and moderate credit. Home Possible is available to low- and middle-income borrowers and offers just a 3% down payment.
Unrated borrowers are eligible for a traditional HomeReady loan with alternative credit sources such as bill payment history. Borrowers who pay a minimum down payment of 3% but less than 20% must pay private mortgage insurance (PMI).
The federal government has set a QM rule to create safer loans by banning or restricting certain subprime mortgage products.