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The purpose of the direct home ownership loan program is to provide very low and low income families with financing to build, purchase, repair or refinance homes and building sites that meet local codes and provide adequate affordable housing.

Direct Eligible Applicants
  • Have an acceptable credit history
  • Be unable to obtain a loan for the full amount from other conventional lending sources on terms they can afford
  • Be a very low or low income applicant (80% or less of county median income
  • Possess the legal capacity to incur debt
  • Have sufficient income for loan repayment, taxes, insurance and other existing debts
  • Be without ownership of decent, safe and sanitary housing

Loan Purposes
  • Loan funds may be used to purchase a new home, purchase a site and build a new home, or purchase an existing home
  • Under certain conditions funds may be used to refinance debts on a home
  • Certified building plans, specifications and lot survey must be provided if building a new home
  • Funds may be used to modernize or repair a home already owned by an applicant
  • An existing home which meets building standards or can be brought up to code with loan funds is also eligible for the program

Loan Terms Loans may made for up to 100% of appraised Market Value plus some of the closing costs. The loan will be for a 33 year term and under certain conditions it may be extended to 38 years.  The full note payment may be reduced on an annual basis by Payment Assistance which is based on household annual adjusted income.  Interest may be reduced to 1%.

Location and Type of Home The home must be located in a rural community with less than 20,000 population, on a farm, or in open country not closely associated with an urban area. It must be located on a site which has a sewerage disposal and water system that is approved by the Division of Health. Adequate streets and other services are approved on a site by site basis.

The cost of the modest home financed must not exceed the USDA Rural Development limit for the county in which the property is located. The home cannot have an in ground swimming pool, but otherwise is not limited in amenities.

USDA INCOME AND PROPERTY ELIGIBILITY SITE This site is used to determine income and property eligibility for certain USDA home loan programs.

Leveraged Loans These loans may be made in partnership with a conventional loan. With these leveraged loans, the loan will be secured by a second Deed of Trust with the conventional lender having the first lien. The interest rate charged to the borrower for the Rural Development loan will be a reduced rate based on the income of the borrower, if eligible.

Applications Applications are filed at the area or sub-area office serving the county where the home to be financed is located. If you are unable to locate the servicing office, you may call the State Office at (573) 876-0990 for further information.

Last Modified:06/14/2012 
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