The United States Department of Agriculture (USDA) makes variety of USDA loans available to assist low- to moderate-income people who wish to buy, repair, or renovate homes in rural areas. While the details and terms of USDA loans differ, all offer low effective interest rates and do not require a cash down payment. To qualify, borrowers need to have a good credit history, and the prospective property for purchase must qualify for a USDA loan.
Single family direct homeownership USDA loans enable low-income households buy, repair or renovate homes in rural areas. The loans can range from 30 to 38 years depending on the income of the buyer and the type of home being purchased. Qualifying borrowers must have a household income below 80 percent of the median income for the area, be currently without acceptable housing, be able to afford the mortgage payments, and be unable to get credit through another lender. Single family direct homeownership USDA loans must be for homes that are considered modest in terms of area market value.
Single family guaranteed housing loans can assist moderate-income households in purchasing a modest home in a rural area. Qualifying borrowers must have a reasonable credit history and an income that does not exceed 115 percent of the median income for the area. They must be able to afford the mortgage payments, taxes, and insurance for the property. These loans are for 30 years, and the interest rates may vary from lender to lender.
Rural repair and rehabilitation loans and grants offer money to low-income homeowners for repairing or improving their home to address health or safety issues. To qualify for this loan, the borrower must make below 50 percent of the area’s median income and be unable to obtain affordable credit elsewhere. Grant eligibility is limited to those 62 years or older who are unable to repay a USDA loan.
Mutual self-help loans help low-income families in rural areas who cannot afford clean, safe housing. Prospective homeowners do much of the labor to build the homes themselves. Eligible families must have income that is below 80 percent of the area’s median income, be without adequate housing, and have no other available credit. The term of the loan is for up to 38 years and effective interest rates can be as low as about 1 percent.
If you are a challenged by a lack of funds to buy, build or improve your rural home, an USDA loan may be the right option for you. Contact us today to discuss to learn more.