Government Loans

Government loans are definitely one of the categories that can be subdivided multiple types. Borrowers can secure mortgage loans subsidized by the government, student loans for schooling, and small business loans. Each of the subdivisions helps a different sector of the population reach and fulfil their dreams.

Mortgage loans subsidized by the government include FHA, VA, and conventional home loans. FHA loans are designed for lower to middle income applicants who may not have the cash on hand to close a conventional loan, and desire to wrap the down payment into the loan itself. VA loans, which are guaranteed by the U.S. Dept. of Veterans Affairs, are designed to help veterans and active service personnel obtain a home loan of up to $203,000.00 without a down payment. Conventional loans are straightforward mortgage loans and can usually be acquired by anyone with perfect credit.

Most mortgage loans are covered by the government and they can a fixed or variable rate. A fixed rate loan is any type of loan listed above where the interest rate remains the same across the entire length of the loan. A variable rate loan is one where the interest rate fluctuates over the life of the loan based on the current interest rate trends. Balloon mortgages are short-term loans at a fixed rate, usually with terms of 3, 5, or 7 years. The payments are bases on a thirty year loan and at the end of the term, a lump sum payment for the rest of the loan is due.

Mortgages are not the only loans the government subsidizes. Many college students and their families find that they are need of extra money to cover the cost of education. Families can get a loan for the students, or for the parents, and there are a few government loans available to help. Repayments of these loans do not start until the student has graduated and secured gainful employment. If the student has difficulties securing a job, deferments are available to help them along.

The easiest student loan to obtain is a Federal Stafford Loan. These are available to all students, whether they are in an undergraduate or graduate program. They have fixed rates, no credit checks, and postponed repayments. Any full-time student can apply for one of these loans. If the parent wants to cover the cost of their child's education, a Federal PLUS loan for Parents is the way to go. Parents can borrow the total cost of their child's undergraduate program and they are not need-based so any parent with a steady income can qualify. Federal Grad PLUS Loans are designed for the student to borrow all of the cost of their higher-level degree and can used to pay not only for school-related expenses, but also living expenses. A Federal Consolidation Loan is a loan that combines all of the student's education loans into one easy and affordable loan, sometimes with a better interest rate than before.

The government will also help qualifying borrowers get capitol to start their own small business. The Small Business Association (SBA) was designed to act as the government agent in providing start up capitol in the form of loans or grants, help businesses budget and use their money wisely, and give overall general support to anyone who is business minded. The SBA will also help businesses partner with organization such as NASA and MSHA to promote their services and products.

There are other government loans available and each country around the world may have their own versions of the ones listed above. Potential borrowers should research more information on what is available to them online, at their local library, or contact their local government representative.