Home Loan Program Just for Rural Households Saved by Farm Bill

The recent farm bill helps homeowners in rural areas who have a hard time finding home loans.

A USDA home loan program helping low- and moderate-income borrowers buy and refinance homes in rural areas got a boost in the recent farm bill signed into law by President Obama. The program had been threatened in 900 rural areas where populations have grown.

But the law allows the status quo on population count to remain until the 2020 Census, retaining eligibility for those 900 communities.

The Rural Home Loan Program offers 100% financing and no-money-down home purchase loans, as well as refinance loans for homeowners looking for a lower payment or money to fund home repairs.

It’s an important source of home loans for farm families whose modest incomes make it hard to save up even the minimum 3.5% FHA downpayment.

The farm bill will keep the program available in rural areas that grow to have up to 35,000 people. Previously, homeowners could only use the program in areas with no more than 20,000 people — a standard set more than 40 years ago.

The new population limit, contained in the farm bill, was backed by the NATIONAL ASSOCIATION OF REALTORS® and supported by many rural members of Congress.

What Home Loans are Included in the USDA Program?

Rural Development Guaranteed Home Loans

No-downpayment, 30-year loans for people earning no more than 115% of the median income. Can be used to purchase, build, repair, renovate, or relocate a home.

Direct Housing Loans

No-downpayment, 33-year loans for people earning no more than 100% of the median income. Can be used to purchase, build, repair, renovate, or relocate a home.

Home Repair Loans and Grants

People age 62 and older can borrow up to $20,000 at 1% interest to pay for improvements that resolve home health and safety issues, such as making a home handicap accessible or repairing roofs, heating, electrical, and plumbing systems.

Homeowners earning 50% or less of the median income can receive a grant of up to $7,500 to pay for home health and safety issue corrections.

Wondering if your income is low enough to qualify for a Rural Housing Loan? Check out the 2014 income limits.

Related: Loan Options When You Don’t Qualify Under the New Mortgage Rules