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RURAL HOUSING SITE LOANS
RD INSTRUCTION 444.8

The purpose of the Rural Housing Site Loan Program is to assist public or private not-for-profit organizations with the purchase and development of adequate sights, including the construction of essential access roads, streets, utility lines, and necessary equipment which will become a permanent part of the development.

Eligible Applicants The applicant must be a private or public not-for-profit organization.

Applications The application will be in the form of a letter to the Area or Sub-Area office which would include:
  • Financial statement
  • General description of the project
  • Estimated cost and amount of loan needed
  • Evidence of inability to obtain credit elsewhere
  • Evidence of need for the proposed sites in the locality by low- and moderate-income families
  • Evidence of any state, county, or local planning, zoning or other ordinance imposing additional restrictions upon the proposed site

Terms
  • For Section 523 – Self Help Site Loans – Interest rate is 3%.
  • For Section 524 – Low and Moderate Site Loans – Interest rate is the same as the current interest rate in effect for the Section 502 loan program. Maturity date will be two years from the date the loan is made. National Office may authorize an extension of the maturity date.

Security Each loan will be secured by a mortgage on the property purchased or improved with the loan and a security interest in the funds held by the corporation in trust for the Government.

Funding Allocations are maintained at the National Office. Applicants must get prior National Office approval before proceeding with the final request.
Eligible Loan Purposes
  • Access roads, streets, utility lines
  • Purchase of land
  • Public water and waste disposal facilities if they are not available and cannot reasonably be provided on a community basis with other financing, including Rural Development Water and Waste Disposal association loan
  • Engineering fees, legal fees, and closing costs
  • Actual cash costs of incidental administrative expenses such as postage, telephone, advertising, etc.
  • Needed landscaping, planting, seeding, or installation of sod, or other necessary facilities related to buildings such as walks, parking areas, and driveways

Ineligible Loan Purposes
  • Purchase more land than immediate need for locality (generally, how many lots can be sold within 2 years)
  • Payment of commissions or refinancing debts
  • Purchase of land from a member of applicant-organization
  • To develop lots which will be excessive in costs
Program Restrictions The sites developed with a site loan (Sec. 524) must be for housing low- and moderate-income families and may be sold to families, nonprofit organizations, public agencies, and cooperatives eligible for assistance under any Section of Title V of the Housing Act of 1949. This could be a private lender, HUD, individuals who are eligible for a VA guaranteed loan, state or local public agencies, such as a housing authority, as long as they meet the income guidelines.
Last Modified:06/22/2012 
 
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