Together, America Prospers Rural Home Loans (Direct Program) Who may apply for this program? Borrowers are required to repay all or a What does this portion of the payment subsidy received A number of factors are considered over the life of the loan when the title to program do? when determining an applicant’s the property transfers or the borrower is eligibility for Single Family Direct Home no longer living in the dwelling. Also known as the Section Loans. At a minimum, applicants interested in obtaining a direct loan must Applicants must meet income eligibility 502 Direct Loan Program, this have an adjusted income that is at or for a direct loan. Please contact your program assists low- and below the applicable low-income limit local RD office to ask for additional for the area where they wish to buy a details about eligibility requirements. very-low-income applicants house and they must demonstrate a obtain decent, safe, and sanitary willingness and ability to repay debt. What is an eligible area? housing in eligible rural areas by Applicants must: Generally, rural areas with a population less than 35,000 are eligible. Visit the providing payment assistance • Be without decent, safe, and USDA Income and Property eligibility to increase an applicant’s sanitary housing website for complete details. repayment ability. Payment • Be unable to obtain a loan from other resources on terms and assistance is a type of subsidy How may funds be used? conditions that can reasonably be that reduces the mortgage expected to meet Loan funds may be used to help low-income individuals or households payment for a short time. • Agree to occupy the property as purchase homes in rural areas. Funds The amount of assistance is your primary residence can be used to build, repair, renovate, determined by the adjusted • Have the legal capacity to incur a or relocate a home, or to purchase loan obligation and prepare sites, including providing family income. water and sewage facilities. • Meet citizenship or eligible noncitizen requirements How much may I borrow? • Not be suspended or debarred from The maximum loan amount an participation in federal programs applicant may qualify for will depend Properties financed with direct loan on the applicant’s repayment ability. funds must: The applicant’s ability to repay a loan considers various factors such as • Be modest in size for the area income, debts, assets, and the amount • Not have market value in excess of of payment assistance applicants the applicable area loan limit may be eligible to receive. Regardless of repayment ability, applicants may • Not have in-ground swimming pools never borrow more than the area loan • Not be designed for income limit (plus certain costs allowed to be producing activities financed) for the county in which the property is located. Rural Home Loans (Direct Program) What is the interest rate and payback period? • Fixed interest rate based on current market rates at loan approval or loan closing, whichever is lower. • The monthly mortgage payment, when modified by payment assistance, may be reduced to as little as an effective 1% interest rate. • Up to 33 year payback period - 38 year payback period for very low income applicants who can’t afford the 33 year loan term. How much down payment is required? No down payment is typically required. Applicants with assets higher than the asset limits may be required to use a portion of those assets. Is there a deadline to apply? Applications for this program are accepted through your local RD office year round. How long does an application take? Processing times vary depending on funding availability and program demand in the area in which an applicant is interested in buying and completeness of the application package. What governs this program? • The Housing Act of 1949 as amended, 7 CFR, Part 3550 • HB-1-3550 - Direct Single Family Housing Loans Field Office Handbook NOTE: Because citations and other information may be subject to change, please always consult the program instructions listed in the section above titled “What Governs This Program?” You may also contact your local office for assistance. You will find additional forms, resources, and program information at rd.usda.gov. USDA is an equal opportunity provider, employer, and lender. Last Updated January 2020 Together, America Prospers Single Family Home Loan Guarantees What does this Who may apply for this program? What are applicant qualifications? Applicants must: • Income. Non-Self-Employed: program do? One-year history required. • Have a household income that does not exceed 115% of median Self-Employed and Seasonal: This no downpayment, household income.* Two-year history required. 100% financing program assists • Agree to occupy the dwelling as • Assets. No downpayment or approved lenders in providing their primary residence. reserves required. low- and moderate-income • Be a U.S. citizen, U.S. non-citizen • Credit. Must demonstrate a households the opportunity to national, or Qualified Alien. willingness and ability to repay debts. No set score requirement. • Be unable to obtain conventional own adequate, modest, decent, Alternative credit allowable for those financing with no private mortgage safe and sanitary dwellings as with no traditional credit. insurance (PMI). their primary residence in eligible • Monthly housing payment. Total • Not be suspended or debarred from payment (principal, interest, taxes, rural areas. participation in federal programs. insurance, HOA dues, RD annual fee) typically should not exceed Eligible applicants may purchase What properties are eligible? 29% of gross monthly income. existing homes (which may • Must be located within an eligible • All monthly debt payments. All rural area.* include costs to rehabilitate, payments included on credit report, • Must be a single-family dwelling including proposed new mortgage improve or relocate the dwelling) (may include detached, attached, payment, typically should not exceed or build new. PUD, condo, modular, and 41% of gross monthly income. manufactured). Student loan payments. Fixed USDA provides a loan note • Must meet HUD 4000.1 payment: use actual payment or 1% of loan balance. guarantee to approved lenders, minimum standards. encouraging participation by • No set maximum purchase Non-fixed payment (IBR, graduated, price (based solely on applicant adjusted, etc.) plans: Use 0.5% of minimizing their risk. repayment ability). loan balance. • No set acreage limits. Must be • Seller (or interested party) This program is NOT restricted common for the area. contributions. Not to exceed 6% of to first-time homebuyers. sales price. • No seasoning requirements (“flipped” properties allowed). • Gift funds. No limit. Single Family Home Loan Guarantees What types of loan products What governs this program? What if I don’t qualify? are available? • 7 CFR part 3555 - This part sets USDA also offers a direct 502 • Purchase existing or build new with the forth policies for the Single Family purchase program which provides Single-Close construction program. Housing Guaranteed Loan Program for subsidized payments for those (SFHGLP) administered by applicants from households with income • Current USDA Rural Development USDA Rural Development. It below 80% of MHI and who cannot loan holders can take advantage of addresses the requirements of qualify for a guaranteed loan. Interested lower rates by utilizing one of Rural Section 502(h) of the Housing Act applicants should contact their state Development’s refinance options. of 1949, as amended, and includes USDA Rural Development office. • Interest rate is negotiated between policies regarding originating, the applicant and the lender. Rate servicing, holding, and liquidating Tools and Resources: must be a 30-year fixed rate. SFHGLP loans. To determine Property and Income • Program lending is extended to 100% • HB-1-3555 - SFH Guaranteed Loan eligibility: https://eligibility.sc.egov. of appraised value, not purchase Program Technical Handbook. This usda.gov/eligibility/welcomeAction.do price, so borrowers may potentially handbook provides Agency staff include closing costs and home and lenders participating in the repair expenses into USDA financing. Single Family Housing Guaranteed Loan Program with the tools needed • Funds may be used for closing to originate, underwrite, and costs, reasonable and customary service guaranteed loans efficiently expenses associated with the and effectively. purchase transaction, connection fees for utilities, tax and insurance escrows, essential household Why does the USDA Rural equipment, site preparation. Development do this? This program helps lenders work How do we get started? with low- and moderate- income families living in rural areas to Interested applicants can apply for make homeownership a reality. a Section 502 Guaranteed Loan Providing affordable homeownership through any approved USDA Rural opportunities promotes prosperity, Development lender. We encourage which in turn creates thriving you to contact your preferred lender communities and improves the quality and ask if they are an approved lender of life in rural areas. with USDA Rural Development. Who can answer questions? Applicants with questions should contact an approved lender. We encourage you to contact your preferred lender and ask if they are an approved USDA Rural NOTE: Because citations and other information may be subject to change, Development Guaranteed lender. please always consult the program instructions listed in the section