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USDA Rural
Development provides Single Family
Housing loans in rural areas to eligible moderate, low, and very low
income applicants who are unable to obtain credit elsewhere. The loan
may be to purchase and/or repair existing housing, purchase a building
site and construct a dwelling, purchase a newly constructed dwelling, or
new manufactured housing. These homes must be owned and occupied by the
borrower. Rural areas include open country and places with population
of 10,000 or less and, under certain conditions, towns and cities
between 10,000 and 25,000 population.
Direct Loans With Leveraged Participation
This program
provides more opportunities to low and very low income applicants by
leveraging agency resources. A leveraged loan is a Rural Development
loan that is supplemented by a loan or grant of at least 20% from
another funding source. The additional funding source may be a private
lender, State or Local government, or non profit organization.
Financing can be up to 100% of the market value with no down payment.
The Rural Development loan payments are subsidized. The amount of Rural
Development subsidy varies based on an annual review of household
income. Loans that are leveraged with other funding sources receive a
processing priority.
Direct Loans
With Self-Help Technical Assistance
Under this program, low and very low
income applicants provide a substantial portion of the labor involved in
building their own homes. This “sweat equity” contribution reduces the
total cost of purchasing a home. Non profit organizations, funded
through a Rural Development grant program, help the families become
successful homeowners by providing technical assistance including
homeownership education, loan packaging, and construction supervision.
Rural Development provides financing to the individual homeowners
through the 502 subsidized loan program. The local Rural Development
office can provide you information regarding the availability of this
program in your area and who to contact.
Government Owned Homes and Assumption of Existing Direct Loans
Priority is given to
qualified low and very low income applicants to purchase government
owned homes or purchase existing homes financed through the 502 direct
loan program. Rural Development may also provide financing for repairs
and closing costs in conjunction with these types of purchases. This
financing can be up to 100% of the market value with no down payment.
The local Rural Development office can provide a list of government
owned homes that are available.
Direct Loans - General
Under this program, low and
very low income applicants may obtain 100% Rural Development direct
financing to purchase and/or repair a home. The amount of Rural
Development subsidy varies based on an annual review of household
income. Because availability of funds for this program is limited,
priority is given to those in targeted areas or those who have a
hardship situation such as substandard housing or overcrowding.
Eligibility Requirements
All Rural Development loans
have certain eligibility requirements that must be met. Some of these
requirements are listed below:
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Household income cannot exceed an adjusted income limit
based on household size (refer to charts below).
Ø
Must have a satisfactory credit history.
Ø
Must have reliable and dependable income.
Ø
Must show repayment ability including the loan payments,
real estate taxes, homeowner’s insurance and current debt obligations.
Ø
Must be a U.S. Citizen or legally admitted U.S. resident.
Ø
Must be 18 years of age or older and able to enter into a
binding contract.
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