 TITLE: What Is a Government-Backed Mortgage? CONTENT: How Do Government-Backed Mortgages Work?\n----------------------------------------\nA government-backed mortgage is a loan insured by one of three federal government agencies: the Federal Housing Administration (FHA), the U.S. Department of Agriculture (USDA) or the Department of Veterans Affairs (VA).\nFor each loan type, the backing agency insures the loan amount, protecting the lender in the event a borrower can't repay the debt. The arrangement significantly reduces the risk to lenders and may make it easier for them to offer lower interest rates or low or even no down payment requirements.\nUnlike some other government loans, which you apply for directly with the federal government, government-backed mortgage loans are offered by private lenders. Not all lenders offer each type of loan, though, so you may need to do some research if you're looking for a specific type of mortgage loan.\nGovernment-backed mortgage loans are different from conventional loans—the most popular type of mortgage loan—in a few ways:\n*   Conventional loans are not insured by a government agency, so they're riskier for lenders and tend to have stricter eligibility requirements.\n*   Government-backed loans have different cost structures, including upfront fees and mortgage insurance requirements.\n*   Conventional loans are more popular and accessible than government-backed mortgage loans.\n*   Government-backed loans have certain requirements that you won't see with conventional loans. For example, USDA loans are designed for folks buying a home in an eligible rural or suburban area, and VA loans are reserved for members of the military community and their families.\n*   Fannie Mae and Freddie Mac, which are government-sponsored enterprises but not government agencies, set conforming rules for conventional loans. The two may also purchase and guarantee loans that meet their standards through a secondary market.\nDepending on your situation, it may be a good idea to consider multiple types of mortgage loans to ensure you find the best fit for your needs. END