| |
Business Programs | Cooperative Development Programs | Homeownership Programs | Rental Housing Programs | Community Facilities Programs | Water and Waste Program | Telecommunications Program | Electric Program | Management Initiatives | Resource Summaries
Section 502 Rural Housing Direct Loan Program. This program provides mortgage financing to very low- and low-income families who cannot obtain credit from other sources. Borrowers are offered fixed-interest-rate loans with maturities ranging from 30 to 38 years. The loans are subsidized at a graduated interest rate level from 1% to a percent over Treasury’s cost of money, depending on family income. Approximately 40 percent of the people served earn less than 50 percent of the median income in the rural area in which they live; the remainder earn between 50 and 80 percent. The 502 program also provides "supervised credit" to its borrowers to help them maintain their homes in times of financial crises through workout agreements and moratoriums.
Section 502 Guaranteed Loan Program. The Section 502 Loan Guarantee program provides homeownership opportunities to low and moderate-income rural residents, typically those whose incomes are between 80% and 115% of the median income in the county. The program offers a 90 percent guarantee as encouragement to private lenders to provide 30-year, fixed-rate guaranteed mortgages for customers who would be unable to obtain credit without the guarantee. The loans can be for up to 100% of market value or for acquisition cost, whichever is less, thereby removing the down payment barrier that prevents many people from becoming homeowners.
Mutual Self-Help Housing Program. The Mutual Self-Help Technical Assistance Grant program truly empowers very low-income and low-income rural Americans by enabling them to use “sweat equity” to help reduce the cost of homeownership. Nonprofit organizations and local governments may obtain grant funds to enable them to provide technical assistance to groups of families work cooperatively to build their own homes. Typically, the future homeowners obtain section 502 direct loans to finance their home, however, other mortgage products have also been used. By providing their "sweat equity", the future owners help themselves as well as others in the group to own a home with a smaller mortgage than if the borrower paid full market price. It is estimated that a homeowner under the self-help method realizes, on average, a 10-15 percent reduction in construction costs while learning basic construction and maintenance skills. The Self-Help Program also builds a strong sense of community commitment and involvement among the participants.
Section 504 Rural Housing Loan and Grant Program. This program provides financial assistance to very low-income rural homeowners to remove health and safety hazards from their homes. Grants are limited to $7,500 and are only available to elderly homeowners (those age 62 or over) whose incomes are 50 percent or less of the median in the rural area in which they live. At the Secretary’s discretion, the grant limit can be increased to $15,000.
Section 533 Housing Preservation Grant Program. This program provides financial assistance through non-profit groups and government agencies to very low- and low-income homeowners to repair their homes, and to rental property owners for the rehabilitation of units which will be rented to low- and very low-income families. Housing rehabilitated through this program must be brought up to local building codes.
Section 523 Rural Housing Site Loan Program. This program provides funds to non-profit organizations to develop building sites for participants in the RHS Self-Help housing program. The nonprofit organizations resell these improved sites to program participants at cost, thus passing on their savings in land and development costs. The interest rate on the loans is 3 percent, and the non-profit organizations repay the loans when they sell the properties. Self-Help participants who are able to purchase one of these improved sites generally have lower overall costs and thus require smaller RHS housing loans than those Self-Help participants who acquire their improved building site through the contract method.
Section 524 Rural Housing Site Loan Program. This program is similar to the Section 523 Rural Housing Site Loan program in that it provides loans to non-profit organizations to purchase and develop rural building sites. However, once developed the sites may be provided to any low- or moderate-income person, not just an RHS Self-Help participant. Loans are made at the Treasury’s rate of interest.