Guaranteed Rental Housing Loans

The Guaranteed Rural Rental Housing Program was established to increase the supply of moderately-priced housing in rural areas; ensure that housing is affordable to low- and moderate-income rural residents whose incomes are 115 percent of area median income (AMI) or less; provide housing that is decent, safe, sanitary, and competitive in the market; and foster risk-sharing partnerships with public and private lenders.  Under the program, the Agency will provide credit enhancements to encourage private and public lenders to make new loans for affordable rental properties that meet program standards.

An applicant must: Must be a U.S. citizen(s) or legal resident(s), a U.S. owned corporation, a limited liability corporation (LLC) or a partnership in which the principals are U.S. citizens or permanent legal residents. Other than public agencies, Indian tribes, and individuals, borrowers must provide documentary evidence that they are valid legal entities, licensed to do business in the state in which the property is located and able to enter into agreements governing the loan and guarantee.

Lenders must: Must be an approved and currently active lender in one of the following multifamily housing programs, the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), the Department of Housing and Urban Development (HUD) or the Government National Mortgage Association (Ginnie Mae). A State or local housing finance agency, a member of the Federal Home Loan Bank System or other lender may be eligible to participate if they can demonstrate satisfactory experience with multifamily lending.

Occupants must: The program is designed to provide affordable housing for low- or moderate-income families or individuals whose incomes at initial occupancy do not exceed 115 percent of the AMI adjusted for family size. Monthly rent for a unit may not exceed 30 percent of 115 percent of adjusted AMI. Average project rent may not exceed 30 percent of 100 percent of AMI.

Fund Uses: The program has been designed to increase the supply of affordable multifamily housing through partnerships between HCFP and major lending sources , as well as State and local finance agencies and bond issuers.

Terms: The maximum loan to value is 90% for for-profit entities and 97% for non-profit entities. The guaranteed loan has a minimum term of 25 years and a maximum term of 40 years.  There is no maximum or minimum loan amount.  The interest rate negotiated between the borrower and lender is fixed for the life of the guaranteed loan.

Basic Instructions: 7 C.F.R. 3565 and HB-1-3565