Three programs are available to assist home buyers to purchase a home that the federal government considers rural property. Rural Home Loans, Rural Housing: Farm Labor Housing Loans and Grants and Rural Housing: Housing Repair Loans and Grants all enable eligible loan applicants to purchase or repair rural homes. All three loans fall under the U.S. Housing and Urban Development (HUD) umbrella and are administered by U.S. Department of Agriculture (USDA) Rural Development field offices.
The Rural Home Loans (RHL) program is for eligible applicants to build, buy or improve their permanent residences. If on a permanent site and bought from an approved contractor or dealer, manufactured homes may be financed as long as they meet other specific requirements. Homes may be refinanced with a direct loan under very strict circumstances. The home must be located in an area designated rural by HUD; be modest, safe, sanity and decent; and its value cannot exceed area limits.
Requirements for the RHL program are that the applicant must:
* Have very-low to moderate income – less than 50 percent of area median income (AMI) up to 114 percent of the AMI.
* Be without sufficient housing, but able to afford mortgage payments, including principle and interest, insurance (PITI) and taxes.
* Be unable to get a loan anywhere else, but have a satisfactory credit history.
* Be a U.S. citizen or a permanent resident.
Loan terms are as follows:
* Based on adjusted annual income, direct loan repayments are scheduled over 33 to 38 years.
* Payment assistance may be granted on direct loans based on adjusted family income – installment is reduced to an interest rate as low as 1 percent.
* When the applicant no longer lives in the home, the government may remove payment assistance.
* No funding will be approved for deferred mortgage assumptions/authority.
* Guaranteed loans will be amortized over a period of 30 years.
Rural Housing: Farm Labor Housing Loans and Grants provide financing to develop living quarters for domestic farm workers. General program requirements include the following:
* May be used to build, buy, repair or improve homes for farm workers.
* Eligible participants may be farmers, family farm coops, associations of farmers, Indian tribes, public agencies, non-profit organizations or associations of farm workers.
* Usually, loan applicants must not be able to obtain financing elsewhere – some exceptions apply.
* Are provided to eligible non-profit groups, farm worker associations, public agencies and Indian tribes.
* Are allowed for use in urban areas for farm workers living nearby – only RHS exception.