Please send comments or suggestions to: beverly.helton@al.usda.gov
Rural Housing Programs
Section 502 Guaranteed Single Family Housing Loans
Lenders Manual (PDF)
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TYPE OF ASSISTANCE: Home ownership loans may be used to buy or build rural homes. Maximum repayment ratios are 29% principal, interest, taxes and insurance and 41% total debt. Loans can be made up to 100% loan to value with no closing costs.
ELIGIBILITY REQUIREMENTS: Property to be financed must be located in an area designated as rural. Generally this includes towns with populations of 10,000 or less, or in certain conditions, a town of 20,000 or less that is not contained in a Metropolitan Statistical Area (MSA). Families must not already own adequate housing, be unable to obtain all of their needed credit from other sources, and have sufficient income to cover house payments, taxes, insurance and necessary living expenses.
FUND AVAILABILITY AND MAXIMUM AMOUNTS: Funding is based upon an annual appropriation. The maximum loan amount is determined by repayment ability and appraised value.
INTEREST RATE: Negotiated between the lender and the borrower (cannot exceed Fannie Mae's 90 day actual/actual rate plus .6%).
TERMS: 30 year fixed mortgage with no Private Mortgage Insurance (PMI). Escrow of Real Estate Taxes and Insurance is required.
COLLATERAL: Mortgage on real estate financed.
FEES: Guarantee Fee of 2% of loan amount can often be included in loan.
CREDIT REQUIREMENTS: A credit history that indicates a reasonable ability and willingness to meet obligations as they become due.
CONTACT: Applications are made to lenders throughout the state. For a listing of Approved Lenders, contact the Alabama Guaranteed Rural Housing Loan Processing Center.
Please send comments or suggestions to: beverly.helton@al.usda.gov