The federal government provides financial assistance in certain circumstances, but learning about and benefiting from these programs can be difficult.
In some cases, the government does not lend money directly. Instead, loans are offered by borrowers (such as banks and financial companies) and supported by the US government: the government promises to repay if you, the borrower, do not.
This guarantee reduces the risk for lenders and makes them more willing to lend at attractive rates, and they are willing to lend in situations where you may not qualify for a loan.
There are several types of credit, and new programs occasionally come in response to events such as environmental disasters and other crises. The most common types of loans are:
- Student loans
- Housing loans, including disasters and home improvement loans
- Business loans, including farms and ranches
If you need help paying for school, federal student loans (under the Direct Loan program) are probably the best option. They are easy to qualify for, have competitive rates and provide flexibility when you get on your feet (and when you hit the occasional speed in life).
For example, during the unemployment period, you may be able to skip your loan payments temporarily. You can also reduce the required loan payment to make it affordable (given the income level).
When borrowing for education, it is almost always wise to borrow as much as you can from government programs before reaching out to private lenders.
Private lenders may also offer feature borrowers, but they are far less generous than government loans. They often have variable rates and are harder to qualify for (you will need good credit or a cosigner).
Government loans for housing
The federal government encourages homeownership. There is certainly some debate on this topic, but the justification is that homeowners have the opportunity to build equity in their homes and improve their standard of living. They are involved in the community, take care of their properties and enjoy a sense of control over their living environment.
Homebuyer programs for the first time
They help people get into homeownership. They can be offered through federal or local government programs, as well as some nonprofit organizations.
Features typically include payment assistance or low-interest rates. However, these programs are not free for everyone. Borrowers are usually limited to specific incomes, and there may be limits to how much you can get from increasing the value of your home.
They are among the most popular options for borrowers looking to reduce their payments. You can only put in 3.5%, and it’s easier to use gifts and concessions to cover closing costs.
However, you will have to pay an additional insurance premium over a long period of time, which may not work in your favor. Read more about how FHA loans work.
The mortgage crisis is behind us, but some have not yet recovered. Other, local factors can also lead to home value. If you are unable to refinance (because you are underwater, for example), there are still several mortgage assistance programs available.
Several other less popular loan programs are supported by government or government agencies. For example, VA loans are available to officers and veterans, and USDA loans offer up to 100% financing for specific borrowers in rural areas.
Home improvement and repair
If you own a home that needs repair (or buy one), the government is willing to help keep your home and neighborhood a clean, safe and well-lit place.
FHA 203 (k) loans provide funds for the purchase or rehabilitation of a home. Following the disaster, the US Small Business Administration (SBA) provides funding to repair your main residence and replace certain items. Even though the loan is SBA, you do not need to own the business.
In addition to supporting loans, the government also offers programs that can help you reduce the amount you have borrowed. Civil servants such as law enforcement officials, teachers, firefighters, and EMTs can also benefit from the Good Neighbor Next Door program.
Local authorities can also provide programs that help improve energy efficiency. PACE programs provide money for projects such as solar installations, sustainable appliances and more.
On the rise of the boating tide: small businesses are opening jobs for people in the community and generating tax revenue for local and federal governments.
If you need help getting started or growing your venture, buy government loans first. SBA loans should be your first choice, and they are available at many local banks and credit unions.
While the government helps by guaranteeing credit, you will also need to put some skin in the game. Be prepared to make a personal guarantee on most of the business loans you apply for.
SBA 7 (a) Small Business Loan is the most popular loan program, providing $ 2 million. Other loans are available for small businesses. In particular, the SBA promotes micrology programs to help small businesses and nonprofits expand.
The federal government does not offer (or guarantee) personal unsecured loans. Loan programs tend to serve a specific purpose, such as financing your education, starting and developing a business, or promoting safe and well-maintained housing.
It is harder to influence how money is spent with personal credit, so the policy is less likely to trigger that type of debt. Your best options for personal credit are:
- Visit your local bank or credit union and apply for a loan
- Try a reputable online lender or P2P lending service
Since there is no government guarantee for this debt, you may have a harder time getting approved: you need decent credit and sufficient income to qualify for a loan. If you have trouble getting approved, you may need to pledge collateral or ask someone to exchange a loan for you.