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A house is more than a roof over our heads; it is often the cornerstone upon which rests our ability to live near good jobs and to gain access to good schools and other public services.
Homeownership builds economic stability and, over the long term, creates equity to finance education, business startups and retirement.
USDA Rural Development also provides assistance for apartment living to rural Americans who cannot afford the purchase price and maintenance costs of their own individual house.
Additionally, USDA Rural Development Housing Programs can help subsidize monthly mortgage and rental payments, limiting these costs to no more than 30 percent of the adjusted monthly income of the applicant.
These subsidies can be used for the direct home ownership, rural rental and farm labor programs.
| Direct Housing Loans -
The
Section 502 Rural Housing Direct Loan Program provides very low and low
income families with financing to build, purchase, repair or refinance homes
and building sites that meet local codes. The home must be located in a rural community with less than 10,000 populations, on a farm or in open country not closely associated with an urban area. The home must be located on a site which has sewage disposal and water system approved by the Department of Health or their approved private contractor. |
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Adequate streets and other services are approved on a site by site basis. The cost of the modest home financed must not exceed the HUD Section 203b 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. |
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Guaranteed Home Loans - Single Family Housing Section 502 Guaranteed Loans require no down payment an no monthly mortgage insurance and are loans made by approved mortgage lenders to qualified low and moderate income individuals and families in rural areas. USDA Rural Development is expanding homeownership opportunities and affordability to homebuyers by providing lenders with loan guarantees that protect the lender from risk of loan loss. | |||
The lender passes the benefit on to the home buyer in the form of a loan requiring no down payment or mortgage insurance, limiting loan and closing costs, and offering favorable interest rates similar to conventional loans. The two percent loan guarantee fee paid by the applicant replaces mortgage insurance and is significantly lower than projected cost of monthly mortgage insurance. The guarantee fee may be added to the loan, which may be for a maximum or 102 percent of the appraised value.
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Rural Housing Guaranteed Loan Program |
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| Home Improvement and Repair Loans and Grants - The Section 504 Home Repair Loan and Grant program provides loan and grant funds to be used to pay for needed repairs and improvements to dwellings of eligible very low income families living in rural areas with a population of 10,000 or less. | |||
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Grant funds, which must be used to remove
health and safety hazards may be made to persons 62 years or older who lack
repayment ability for a loan. Repair loan and grants may be used to remove health and safety hazards such as repairing roofs, heating, electrical and plumbing systems, water and waste disposal, installing screens, windows, insulation and other steps to make the home safe. Home improvement loans may include similar purposes but may also be used to modernize, add a room, remodeling and making overall improvements to the home. The home must owner-occupied.
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| The Taulung family received a $2,490 loan to have their roof replaced, repair the ceiling and electrical problems. (Kosrae, Federated States of Micronesia) | |||
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Self-help Housing -
The Section 502 Mutual Self-Help Housing Loan program is used
primarily to help very low- and low-income households construct their own
homes.
Families participating in a mutual self-help project perform approximately
65 percent of the construction labor on each other's homes under qualified
supervision. |
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Self-Help Housing Program |
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Using the Mutual Self-Help construction method, a group of families build their homes together over a period of 8-12 months, contributing an average of 30 hours per week, per family. The savings from the reduction in labor costs allows otherwise ineligible families to own their homes. If families cannot meet their mortgage payments during the construction phase, the funds for these payments can be included in the loan. Applicants must have very low or low incomes. Very low income is defined as below 50 percent of the area median income (AMI); low income is between 50 and 80 percent of AMI. Families must be without adequate housing; however, they must be able to afford the mortgage payments including principal, interest, taxes and insurance (PITI).These payments are 22 to 26 percent of an applicant's income. In addition, applicants must be unable to obtain credit elsewhere, yet have reasonable credit histories. Families with very low incomes living in substandard housing are given first priority. |
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| Self-help Housing Technical Assistance Grants Section 523 Self-Help Technical Assistance Grants are provided to non-profit organizations, public bodies, or Tribes who in turn provide technical assistance to low and very low income households to build their own homes via the Mutual Self-Help Housing method. Section 523 Grant funds may be used to pay salaries, rent, and office expenses of the recipient organization.
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Multi-Family Housing
Loans -
USDA Rural Development offers several programs that provide
money for rental properties intended for low and moderate-income tenants.
The Guaranteed Rental Housing Program is designed to increase the supply of
affordable housing through partnerships between USDA Rural Development and
major lending sources, as well as state and local finance agencies and bond
issuers. Farm Labor Housing Loans and Grants enable farmers, public or private nonprofit organizations and units of State and local governments to build, buy, or repair farm labor housing in either dormitory or multi-family apartment style. Housing Preservation Grants help low-income homeowners repair and rehabilitate their homes. Rental property owners can use them to repair and rehabilitate their units if they agree to make such units available to low-income families. We can also help subsidize monthly mortgage and rental payments, limiting these costs to no more than 30 percent of the adjusted monthly income of the applicant through our Rental Assistance Program. |
Hualalai Elderly Housing, Phase II |
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Kamuela Senior Housing, Kamuela, Hawaii |
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Rural Rental Housing Program (Section 515) The Section 515 program provides loans with interest rates as low as one percent to developers of affordable rural rental housing. Many rural residents face the dual problem of limited incomes and a chronic lack of affordable housing. According to data from USDA's Economic Research Service, the average Section 515 Rural Rental Housing tenant earns less than $8,105 annually. Almost 90 percent of these tenants have incomes below 50 percent of the median and in their rural area. Approximately 40 percent are elderly. One in six has a physical disability. Three out of four are women. One in four is a member of a minority group. Farm Labor Housing Program (Section 514/516) Farm workers are often the most poorly housed people in the country. Many live in tents, in shacks without running water, in dilapidated trailers, or in crowded, poorly built dormitories. The Farm Labor Housing Program provides low-interest loans and grants to public or non profit agencies or to individual farmers to build affordable rental housing for farm workers. USDA Rural Development is the only national source of construction funds dedicated to farm labor housing. Rural Rental Housing Guaranteed Loan Program (Section 538) The Section 538 program guarantees loans to develop affordable rental housing in rural areas. Apartment units built under this program are intended for families who earn less than 115 percent of the median income for their area. Because it serves low- to moderate- income tenants, the program complements the Section 515 Rural Rental Housing Program. Rental Assistance Program (Section 521) The Rental Assistance Program provides subsidies to some tenants in Rural Development rural rental or off-farm labor housing complexes so that they do not pay more than 30 percent of their incomes for rent and utilities. The Section 521 Rental Assistance Program is a critical component to ensure the Section 515 and Section 514/516 loan and grant programs remain viable. Housing Preservation Grant (HPG) Program The HPG Program offers funds to qualified public agencies, private nonprofit organizations and other eligible entities to assist low and very low-income rural homeowners repair and rehabilitate their home. Eligible grant purposes includes, but is not limited to:
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Rural Development Hot Links: Rural Development National Office | USDA Home Page | FirstGov Web Portal
Room 311,
Federal Building, 154 Waianuenue Avenue, Hilo, Hawaii 96720,
Tel: (808) 933-8380, FAX: (808) 933-8327, TDD: (808) 933-8321
Rural Development is an Equal Opportunity Lender, Provider, and Employer. Complaints of discrimination should be sent to USDA, Director, Office of Civil Rights, Washington, D. C. 20250-9410
