Borrowing money can be pretty difficult, especially if you’ve found yourself in a tight spot where you’re not sure if and when you’ll be able to pay it back. 

Of course, loaning options are practically at every corner, and you’ll actually be surprised to find out how many are available to you, so much so that the whole process can become incredibly overwhelming. 

From personal loans to small business loans, the options are endless, but if your credit score is too low or if you’re struggling financially, you’re going to have a hard time getting approved for the money you need. 

That is unless you make use of the government-backed loans that are available to you, which are usually much more accessible and come with a number of benefits, including significantly lower interest rates. 

We’ll go over some of these federal loaning options and what you can do to benefit from them, so stick around and learn all there is to know about government loans.

What are government loans?

Essentially, these are loans funded by the federal government, and seeing as the government will foot the loan if the borrower defaults on it, lenders are given much more freedom with whom they’re borrowing their money to. 

This way, the average American can receive money from a private lender much easier than they normally would, and in line with that, the lenders are much more likely to approve a loan for someone with a worse credit score than what they usually settle for. 

On top of this, the federal government offers several direct loaning options to help meet needy Americans’ financing needs, although certain conditions and requirements have to be met before the government approves you for these loans.

The options to consider

Buying a home is only one of the difficulties a low-income American will face in their lifetime, but it’s often one of the greatest, as the price of a property can be far too big for them to cover, and it’s why so many resorts to outside financing to cover this cost. 

If that wasn’t enough, the housing market goes haywire every so often, meaning that affordable homes aren’t exactly easy to find, which is why the government offers assistance with finding these affordable housing options for those who need them.

On average, it’s recommended that you shouldn’t allocate more than 30% of your income to your housing expenses, and while those numbers are optimal, many American families struggle to meet them, often spending far more than 30%. 

FHA loan

Ever since this assistance option was created back in 1934, it’s been helping American families purchase homes at an affordable price. 

The main benefit of FHA loans is that they’re incredibly easy to be eligible for, followed closely by the fact that they don’t require too big of a down payment, sometimes going as low as 3.5%. 

That being said, the option does require those with a credit score between 500 and 580 to put at least 10% forward for the down payment on the home they’re buying.

USDA

Unlike the majority that’d like to live in a bigger city, some Americans just want to get away from it all, and the great outdoors offers a wide variety of rural areas to settle into. 

This is why the US Department of Agriculture offers its loaning option, as it gives an incentive to purchase a home in a rural area, hopefully revitalizing it in the process. 

Naturally, to receive this type of loan, you must qualify for it first, although the upside is that you may be able to get away without ever paying a down payment, as long as you meet certain criteria.

VA Home loan

Unlike the previous two options, VA loans are only available to eligible service members who’ve served a certain amount of time in a branch of the US military. 

This way, veterans can gain access to an affordable housing option with ease, and some of them may even be eligible for $0 down payments and incredibly low-interest rates. ž

Apart from just the service member, their spouses are also eligible for this loaning option, so long as they were married in the period of their service. 

Final word

There are numerous loaning options out there for you to explore, and as overwhelming it may be, it’s what you must do if you wish to secure an affordable housing option or an education that you simply couldn’t afford. 

The federal government offers us much more than we give it credit for, and it’d be a shame to pass up on some of these options considering they’re practically handed to you on a silver platter. 

Read up on what loaning options are available to you and make use of the money you’re being trusted with, as it’s probably the best kind of help you could possibly receive.