To assist very low, low-income, and moderate-income households to obtain modest, decent, safe, and sanitary housing for use as a permanent residence in rural areas.
Procedures for Application
This program is excluded from coverage under 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. For direct loans, an application is made at the Rural Development field office serving the county where the dwelling is or will be located. For guaranteed loans, an application is made to a participating private lender.
Assistance Program Types
(1) Direct Loans
(2) Guaranteed/Insured Loans
Restrictions and Uses
Direct and guaranteed loans may be used to buy, build, or improve the applicant's permanent residence. New manufactured homes may be financed when they are on a permanent site, purchased from an approved dealer or contractor, and meet certain other requirements. Under very limited circumstances, homes may be re-financed with direct loans. Dwellings financed must be modest, decent, safe, and sanitary. The value of a home financed with a direct loan may not exceed the area limit. The property must be located in an eligible rural area. Assistance is available in the States, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, the Commonwealth of Northern Mariana's, and the Trust Territories of the Pacific Islands. Direct loans are made at the interest rate specified in RD Instruction 440.1, Exhibit B (available in any Rural Development local office), and are repaid over 33 years or 38 years for applicants whose adjusted annual income does not exceed 60 percent of the area median income, if necessary to show repayment ability.
Payment assistance is granted on direct loans to reduce the installment to an "effective interest rate" as low as one percent, depending on adjusted family income. Payment assistance is subject to recapture by the government when the customer no longer resides in the dwelling. There is no funding provided for deferred mortgage authority or loans for deferred mortgage assumptions. Guaranteed loans may be made to refinance either existing RHS Guaranteed Housing loans or RHS Section 502 Direct Housing loans. Guaranteed loans are amortized over 30 years. The interest rate is negotiated with the lender.
Disapproval Time/Range of Approval
For direct loans, from 30 to 60 days subject to availability of funds, from the time the application is filed if no backlog of applications exists. A 'pre-qualification' may be provided to potential direct loan applicants upon call or visit a Rural Development office, though results are not binding. For guarantees, a decision is required within 3 days of loan package submission by the approved lender.
Applicants may need to submit evidence of inability to obtain credit elsewhere, verification of income, debts, and other information on the application; plans, specifications, and cost estimates. This program is excluded from coverage under 2 CFR 200, Subpart E - Cost Principles.
Procedure for Award
Rural Development field offices have authority to approve most Direct loan requests. Processing of guaranteed loans varies in each State. Consult your local telephone directory under U.S. Department of Agriculture for a Rural Development field office listing or visit the website for a State Office listing. If no backlog exists, decisions on direct loan applications are made within 30 to 60 days. Requests for guarantee loans are acted upon in 3 days of receipt of the lender's request for guarantee.
Applicants must have very low-, low- or moderate 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; moderate income is below 115 percent of AMI. Families must be without adequate housing, but able to afford the housing payments, including principal, interest, taxes, and insurance (PITI). Qualifying repayment ratios are 29 percent for PITI to 41 percent for total debt. In addition, applicants must be unable to obtain credit elsewhere, yet have an acceptable credit history.
Types of Eligibility
Applicants must meet eligibility requirements. Guaranteed Loan Low and Moderate income eligible.
Moderate Income Guaranteed Loan is available in the following areas/cities
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