When most people hear the about the United States Department of Agriculture (USDA) it is usually associated with standard of beef and not a rural and community development program. The Rural and Community Development “provides homeownership opportunities to rural Americans, as well as programs for home renovation and repair.” Programs like this are getting some new interest since the days of creative lending are over. A similar program, House Key State Bond, is only open to first time home buyers but that is not the case with the Rural and Community Development programs.
There are a few eligibility requirements for the USDA programs: families must meet certain income requirements and live in eligible area of Snohomish County. This does not mean you have to make an insanely low amount or have to buy a home in the middle of the Cascades to qualify. Quite the contrary, a single person can make up to $61,900 and live in Marysville, Lake Stevens, Granite Falls, Snohomish, Stanwood, or Monroe.
There a few different loans, grants and guarantee programs that families can use to obtain single family housing.
- Direct Loan Program (Section 502)
- Loan Guarantee Program (Section 502)
- Mutual Self Help Housing Program (Section 523)
- Home Repair Loan and Grant Program (Section 505)
Curious about qualifying? Contact us and we’ll get you started.
Guaranteed USDA Housing Program Income Limits
Boundaries for USDA Financing
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USDA Direct Loan Program (Section 502)
Under the Direct Loan program, individuals or families receive direct financial assistance directly from the Housing and Community Facilities Programs in the form of a home loan at an affordable interest rate.
Most of the loans made under the Direct Loan Program are to families with income below 80% of the median income level in the communities where they live. Since HCFP is able to make loans to those who will not qualify for a conventional loan, the HCFP Direct Loan program enables many more people to buy homes than might otherwise be possible. Direct loans may be made for the purchase of an existing home or for new home construction.
Loan Guarantee Program (Section 502)
Under the Guaranteed Loan program, the Housing and Community Facilities Programs guarantees loans made by private sector lenders. (A loan guarantee through HCFP means that, should the individual borrower default on the loan, HCFP will pay the private financier for the loan.) The individual works with the private lender and makes his or her payments to that lender.
Under the terms of the program, an individual or family may borrow up to 100% of the appraised value of the home, which eliminates the need for a down payment. Since a common barrier to owning a home for many low-income people is the lack of funds to make a down payment, the availability of the loan guarantees from HCFP makes the reality of owning a home available to a much larger percentage of Americans.
Mutual Self-Help Housing Program
The Mutual Self-Help Housing Program makes homes affordable by enabling future homeowners to work on homes themselves. With this investment in the home, or “sweat equity”, each homeowner pays less for his or her home. Each qualified applicant is required to complete 65% of the work to build his or her own home.
Technical Assistance Grants and Site Loans are provided to nonprofit and local government organizations, which supervise groups of 5 to 12 enrollees in the Self-Help Program. Members of each group help work on each other’s homes, moving in only when all the homes are completed.
Once accepted into the Self-Help Housing Program, each individual enrollee generally applies for a Single-Family Housing Direct Loan (Section 502).
Home Repair Loan and Grant Program
For very low income families who own homes in need of repair, the Home Repair Loan and Grant Program offers loans and grants for renovation. The Home Repair Program also provides funds to make a home accessible to someone with disabilities.
Money may be provided, for example, to repair a leaking roof; to replace a wood stove with central heating; to construct a front-door ramp for someone using a wheelchair; or to replace an outhouse and pump with running water, a bathroom, and a waste disposal system.
Curious about qualifying? Contact us and we’ll get you started.
This is a Great Post!
Many do not know about these programs from the USDA. If you need help in appraisals for USDA loans in your area please let me know! Thanks for the post and please keep up the great work!
Hey Apella, I was pretty surprised to find out this information and I bet many others are too. As more traditional financing means come back into the spot it would be nice to do further research to learn what else is available.
Curious as to how much of a role credit scores plays into all of this. With the rocky homeownership market the last few years, many prior homeowners were forced out of homes to rent. What chance is there that they can requalify for new purchases?
Credit score still plays a majority role in financing just like employment history. Right now the minimum credit score for USDA is 640. As you mention Paul, homeownership has been a bit on the rocky side and there are differences between short selling a home versus foreclosure. I’ve talked with folks who just had a foreclosure and they want to repurchase since their employment situation has changed for the better, however, it is not that easy if a short sale or foreclosure has been reported to the credit agencies.
My bankruptcy is final in 2 weeks totally due to my Ex’s bills and foreclosure after I was divorced from him FOUR years, so my question is : I KNOW I CAN AFFORD a mortgage, but is there any hope to buy a home like now ? Or do I have to wait a certain amount of years before I can qualify and buy a home ? All I want is to have my own home – forever !
Where do I begin ????
Hi Darlene, unfortunately with a bankruptcy the wait times are 3-5 years, depending on circumstances. A bankruptcy is a pretty big mark on a credit report and underwriters don’t like seeing them.