Content provided by the Catalog of Federal Domestic Assistance
10.410 Very Low to Moderate Income Housing Loans
RURAL HOUSING SERVICE (RHS), DEPARTMENT OF AGRICULTURE
Housing Act of 1949, Title V, Section 502, as amended, Public Law 89-117, 42 U.S.C. 1471 et seq.; Public Law 92-310, 42 U.S.C. 1480, 42 U.S.C. 1472; Public Law 98-51; Public Law 100-233; Amendment of Consolidated Farm and Rural Development Act of 1987, Section 601.
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.
TYPES OF ASSISTANCE:
USES AND USE RESTRICTIONS:
Loans and loan guaranteed may be used to buy, build, or improve the applicant's permanent residence. Funds may be used for certain improvements to the dwelling. Manufactured homes may be financed when they are newly on a permanent site, purchased from an approved dealer or contractor, and meet certain other requirements. Under special circumstances, homes may be re-financed. Dwellings financed must be modest, decent, safe, and provide sanitary housing. The cost of a home financed with a direct loan is limited to the most current amount authorized by the Agency. 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(s) specified in RD Instruction 440.1, Exhibit B (available in any Rural Development local office) for the type of assistance involved, and are repaid over an amortization period of up to 33 years for regular loans and 38 years for loans to applicants whose adjusted annual income do not exceed 60 percent of the area median income, if necessary to show repayment ability. Payment assistance is granted annually on direct loans which could reduce the monthly installment on the note to an amount equal to what it would be if the note were amortized to as low as one percent, depending on the loan amount, the size and income of the family. 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. 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.
Applicant Eligibility: 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 be able to afford the mortgage payments, including taxes and insurance. Qualifying ratios range from 29 percent for PITI to 41 percent for total debt. In addition, applicants must be unable to obtain credit elsewhere, yet have reasonable credit histories.
Pre-application Coordination: None. This program is excluded from coverage under OMB Circular No. A-102 and E.O. 12372.
Formula and Matching Requirements: This program has no matching requirements. This program has no statutory formula. A basic formula is used to allocate program funds to various States. The criteria used in the basic formula include the States percentage of the National: Number of rural occupied substandard units, rural population, rural population in places of less than 2500 population, number of rural households between 50 and 80 percent of the area median income, and number of rural households below 50 percent of the area median income. The data source for each of these criteria is based on the latest census data available.
POST ASSISTANCE REQUIREMENTS:
Reports: Borrowers receiving a payment subsidy must submit verification of household income annually for recalculation of benefits.
Account Identification: 12-4141-0-3-371; 12-2081-0-1-371.
In fiscal year 2001, 17,681 new direct loans and 29,123 guaranteed loans were made.
REGULATIONS, GUIDELINES, AND LITERATURE:
7 CFR Part 3550 "Direct Single Family Housing Loans and Grants." For guaranteed loans, 1980-D "Subpart D -Rural Housing Loans."
Regional or Local Office: See Regional Agency Offices. Consult your local telephone directory under U.S. Department of Agriculture for a Rural Development field office listing or visit the website http://offices.sc.egov.usda.gov/locator/app for a State Office listing.
EXAMPLES OF FUNDED PROJECTS:
CRITERIA FOR SELECTING PROPOSALS: