Government loans are created by various Government Agencies, usually State or Federal. Their mission is usually to help a certain group or specific type of borrower. First time homebuyer's, for example, are often a primary focus but can be many other groups such as US Veterans, rural areas, the economically challenged, teachers, police officers, etc...
The lending rules for government mortgages are set by each Agency. The Government Agencies do not loan money to borrowers. The mortgage loans are purchased on the 'secondary mortgage market' from mortgage lenders who loan to the public.
OneTrust Home Loans originates government loans using each Government Agency's guidelines so that they can be purchased on the secondary market thereby replinishing our funds to make more mortgage loans.
The Government Agencies insure or guarantee that lenders will not incur losses in case of default by the borrowers. This insurance/guarantee significantly reduces risk to mortgage lenders who can then offer the lowest rates to their applicants.