Iowa

Rural Housing Direct Loans are loans that are directly funded by the Government. These loans are available for low and very low-income households to obtain homeownership. Applicants may obtain 100% financing to purchase an existing dwelling, purchase a site and construct a dwelling, or purchase a newly constructed dwelling in communities outside of metropolitan areas. The purpose of this loan is to provide financing at reasonable rates and terms with no down payment. Mortgage payments are based on the household's adjusted income. These loans are commonly referred to as Section 502 Direct Loans. Application is made at the USDA Rural Development office serving the county in which the home you plan to buy is located.

• No down payment required if funds are not available.
• Payment Assistance may reduce the effective interest rate, thus reducing the monthly payment.
• Note interest rate is fixed.
• Some closing costs may be included in the loan.
• Private Mortgage Insurance (PMI) is not required.
• Funds may be used to construct a new home or buy an existing home.
• Real Estate Taxes and Insurance are escrowed.

• No down payment required if funds are not available.
  
• Household adjusted income cannot exceed 80% of median household adjusted income of the county.
  Additional information and income limits for your county may be found at www.rurdev.usda.gov.
  
• Applicant must be a US citizen or a noncitizen who qualifies as a legal alien as defined by USDA regulation.
  
• Applicant must use home to be purchased as their residence.
  
• Applicant cannot already own adequate housing.
  
• Applicant must have legal capacity to incur a loan obligation.
  
• Applicant must have a good credit history.
  
• Applicants must have repayment ability for the loan requested.
  
• Applicant must be unable to obtain financing from conventional lenders (bank, mortgage company, etc.)
  
• Home to be purchased must be located in small, rural communities. Typically, towns and cities with a population of less than 20,000 persons qualify.  Visit http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do to determine eligible locations.
• Applicants who are first time home-buyers must complete homeowner education training.
  Click Iowa Homeowner Education to locate courses offered in your area.
  
  For more information regarding the above program, please contact the USDA – Rural Development Office serving the county in which you plan to reside. To find the office serving your county, go to Iowa Office Locations.
  
  

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  Please send any comments or suggestions to:
  keith.bastow@ia.usda.gov
  Iowa Rural Development
  Revised on: July 11, 2006