There is also a guaranteed Single-Family Home Loan program to help moderate income people qualify for a mortgage loan from a bank or mortgage company. The Federal Government guarantees the lender up to 80 or 90 percent of the loan against losses if there is a default on the loan. Lenders are more likely to approve a loan if it is guaranteed against major losses. Also the lender may make these loans available with a reduced or no down payment. The person receiving guaranteed loans deals with the bank or mortgage company, not with the agency.
Lenders can sell the guaranteed portion of the loans on the secondary market.
There are many additional benefits to lenders including CRA credits. The Self-Help Loan Program assists groups of six to eight families or individuals who want to build their own homes with professional supervision. The qualifications are about the same as the regular direct single family housing program above but the participants have to attend more meetings and spend most of their free time working on their new homes. All the participants work on each others houses and the homes are all built at the same time. There is no down payment for these loans and because of savings in labor costs, the overall mortgage is lower.