USDA / RHS Loans

The United States Department of Agriculture (USDA) offers a loan program for rural borrowers who meet certain income requirements. The program is managed by the Rural Housing Service (RHS), which is part of the Department of Agriculture. RHS works with other federal agencies, and a number of both nonprofit and private organizations nationally, in order to pool resources to help America's rural residents most effectively. RHS administers direct loans, loan guarantees and grants to "rural residents who have a steady, low or modest income, and yet are unable to obtain adequate housing through conventional financing." Income must be no higher than 115% of the adjusted area median income [AMI]. The AMI varies by county. See the link below for details:

To learn more, go to USDA borrower eligibility website.

RHS guaranteed loans are available to eligible applicants in rural areas, typically defined as open country or rural towns with no more 20,000 in population. They help rural communities and individuals by providing loans for single family homes and loans and grants for multi-unit housing and community facilities. The programs also make funding available to individuals to finance vital improvements necessary to make their homes decent, safe, and sanitary.

Direct loans are made and serviced by USDA staff; Direct Housing Loans, known as Section 502 loans, is a Housing and Community Facilities Program (HCFP) primarily to help low-income individuals or households purchase homes in rural areas. Applicants for direct loans from HCFP must have very low or low incomes. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance, which are typically 24% of an applicant's income. However, a payment subsidy is available to help applicants make their monthly loan payment. Applicants must be unable to obtain credit elsewhere, yet have reasonable credit histories. The length of the loan can be up to 33 years (38 for those with incomes below 60 percent of the area median income and who cannot afford 33-year terms). The term is 30 years for manufactured homes.

An exception to the rural eligibility requirements is the Farm Labor Housing Program (Section 514/516), which is the only Federal program available for development of housing for farm workers. This program is available in both rural and urban areas.

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