Direct Homeownership Loans -

The acquisition of safe and sanitary housing through purchase or construction is a major emphasis of the housing programs. The agency has taken two approaches for the specific needs of very low and low-income households as well as the requirements of moderate-income households. Direct (Section 502 Housing) Loans are made and serviced at subsidized rates and terms allowing very low and low income households the opportunity to obtain modest, decent, safe and sanitary housing.

Guaranteed rural housing loans made and serviced by approved lenders address the needs of low and moderate-income households. In these situations, commercial lenders utilize their resources, expertise and underwriting criteria to make loans that reflect market conditions. Potential losses are mitigated by loan guarantee, which acts as an inducement to provide 100% financing without private mortgage insurance and participation in rural areas to borrowers with a minimum down payment.

Comparison of USDA Rural Development Loan Products to other Home Loans Calculator.

Loans are available to very low-income homeowners to address health/safety issues, improve weatherization and/or to remove code violations. Loans under this authority are limited to a maximum of $20,000 scheduled for repayment in, not to exceed 20 years at a rate of one- percent (1%) interest. Grants are available to remove health and safety hazards up to $7,500 for senior citizens unable to afford a loan at one- percent interest.

Leveraged loans allow the Agency to serve additional families with it's Section 502 Direct funds. These loans give borrowers lower financing costs with no mortgage insurance on the first mortgage. The second lien is based on the borrower's ability to pay with Payment Assistance provided by the Agency. In most cases, no down payment is required. Leveraged loans furthermore afford lenders the opportunity to expand their borrower population, which often results in business relationships of benefit to all parties. Loans can be made up to a 50/50 blend. The Agency requires the lender to provide at least 20% of the funding. The maximum loan is up to 100% of the appraised value. The term of the first mortgage is 30 years or a 15 year balloon amortized for 30 years. The Agency loan term is 33 years.  Loan amounts vary from $94,000 to $130,000, depending on the area.  Eligible properties include single family dwellings, condos, planned unit developments (PUDs) and rehabilitated units. The property must be in an eligible rural area. Borrowers must be very-low or low income based on the HUD median income amounts listed by the number of people per household. Repayment ratios are 29/41 for very-low income and 33/41 for low income borrowers for the total first year loan payment (PITI) and total debt (TD) ratios respectively. Applicant's credit history must be acceptable. Applicants for assistance in the Leveraged loan program receive priority processing and funding in each Rural Development office.

List of Leveraged Lenders

This program provides service lines, connections, fees for connections, installation of plumbing and related fixtures, and construction/partitioning of a portion of a dwelling for a bathroom. Assistance to any individual for this type of grant has a lifetime limit of $5,000. Applicants must reside in an area which was recognized as a colonia before October 1, 1989.

Need SFH Forms or Regulations?? Click on the following links: National Forms and Regulations, Texas Regulations, Eligible Counties in Texas