Housing and accommodation are very important issues in every state in the US. The total housing debt soared to $13.5 trillion at the year ended 2017, according to the Federal Bank Reserve Bank of New York's Center for Microeconomic Data. This underscores the micro economic nature of housing and its associated mortgage financing.

Government Regulations

Due to the continual increase in household debt, the Federal Government had always been playing critical roles in the housing accommodation industry. The Government regulates the housing and mortgage industry via legal requirements, financial/banking sector regulations and finally through government insured mortgage loans.

This led to the two main kinds of mortgage loan in MN: Conventional Mortgage and Government Insured Mortgages. It is however necessary to always consult with respective mortgage companies in MN to help in selecting preferred mortgage packages.

Conventional Mortgage

Conventional Mortgage is also known as the regular type of mortgage financing from mortgage lenders. This type of home financing requires no government participation in the loan processing and requires that borrowers meet the basic requirements of lenders in the financial market.

Government-Insured Mortgage

These are mortgage loans directly insured or guaranteed by the government. In this case, the government insures mortgage lenders in MN against losses of borrower’s default. There are different kinds of government insured mortgages for different classes of people.

Federal Housing Administration (FHA) Loans: It is known as FHA Loans. It is simply a government insurance mortgage program administrated and managed Department of Housing and Urban Development (HUD).  The loan is open is open to all types of borrowers, including first time home buyers in MN. It requires initial mortgage down payment as low as 3.5% of purchase price mortgage insurance.

Veteran Affairs (VA) Loans: The Veteran Affairs loans is the type of government insured loan provided by the U.S Department of Veteran Affairs to cushion and support military service members in their purchase of homes. The main advantage of this type of government loan is the ability of veterans to receive 100% mortgage financing for home purchase.

The United States Department of Agriculture (USDA) Loans: It is the type of government loan program designed to help rural borrowers to purchase homes. The loan is administrated by United States Department of Agriculture (USDA) to borrowers who meet certain income criteria—steady, predictable but low annual income— for mortgage loan repayments.

Pros & Cons: Government-Insured & Conventional Mortgage

The main difference between Government-Insured and Conventional Mortgage loans is State-backing or insurance against lender’s losses. This makes it easy and efficient for mortgage lenders in MN to bear their lending risk to borrowers. 

While there are many types of government support programs in the mortgage market to help first time home buyers in MN to make home purchases, it is always an important step to consult with credible and reputable mortgage/real-estate brokers to help in making good buying decisions. And you have to always look at the terms of the mortgage before making any firm decision to purchase.