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An FHA loan is a mortgage covered by the Federal Housing Administration in which borrowers pay mortgage insurance to ensure that the lender is protected should the borrower default on payments. These loans are often more appealing to the general public since there are fewer restrictions placed on the borrower to qualify. Since these loans are monitored by a governmental agency, they can offer loans with minimum down payments of 3.5 percent provided the borrower has a credit score of 580 or higher. The lender must be FHA approved since the FHA does not directly offer loans but rather insurance to protect the lenders. FHA loans incorporate 2 payments: the initial down payments of 1.75 percent of the loan amount and monthly payments that vary based on interest rates and the amount financed. 203k loans are also offered through the FHA by financing the home on the final value after repairs allowing borrowers to use some of the loan to complete any repairs on the house. California is home to 2.6 - 2.8 million undocumented immigrants as of 2014. It is estimated that this number has increased since then meaning that more immigrants are on the lookout for financial alternatives in order to purchase their own home and be a part of the American Dream. Owning a single family home in Los Angeles, California can cost $636,150 through a FHA loan.
VA loans are loans offered through the US Department of Veteran Affairs in order to provide loans to returning service members forgoing down payments or a high credit score rating. Since the initial collapse of the housing market, VA loans have increased in popularity with veterans, active duty military members and their families. These loans do not require the borrower to purchase private mortgage insurance which would increase monthly payments if used. These loans offer competitive interest rates since they are less risk to the lender should the borrower default on payment. The VA loan includes a 2.15 percent fee for first time home owners or 3.3 percent for all subsequent loans. This fee goes directly to the VA to ensure that the program is funded without using tax payer dollars. California also participates in the VA Jumbo loan program allowing veterans or active service members to receive higher loans with lower monthly payments and initial down payments. A single family home in California can cost $636,150, including the VA fund fee.
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