Home loans: Rural Development Mortgages

Rural development section of the federal government offers mortgages for homes restricted to the rural areas. These loans offer 100% mortgage value for home mortgages. These are not subsidy loans and therefore cannot be recaptured.

Rural Development Mortgages are very beneficial. They have 100% LTV which is based on home appraisal value, thirty year fixed mortgage and no down payment. Flexible credit is guaranteed and there is no requirement for mortgage insurance according to the guidelines issued by USDA’s Rural Development. Estate agents and FSBOs (for sale by owners) are requested to advertise Rural Development Mortgages and its 100% loan to value home mortgages. This is to increase the awareness and the existence of such a program. There definitely would be substantial increase in real estate sales if the awareness of these loans increase since these loans offers the lowest possible interest rate with a very comfortable term period of loan in the nation.

The RHS (Rural Housing Service) which was set up in 1994 was mainly done to meet the increase in housing and community developments. The department was set up as a result of Department of Agriculture Reorganization Act.  This has enabled rural families and individuals to become homeowners. There are many programs available that helps people in the moderate to low income group. These loans can be used to buy, repair and construct homes. The Rural Development Mortgages have certain eligibility criteria which when cleared home buyers can avail loans at unbelievably low rates of interest, with absence of down payment and minimal closing costs.

Rural Housing Services give the borrowers of their loans many benefits. In the event of defaults by borrower, the RHS would pay the lender the balance amount. This is the guarantee given by Section 502 Rural Housing Guaranteed Loan Program. The main aim of these facilities and guarantees given to these loans are to encourage even the moderate income rural residents to buy or build houses which are moderately priced. The loan can be used only on primary residence or for buying primary residence. It is not permissible to use it for commercial purposes. The loan can be used for repair, modifications; renovations etc of existing homes or even construct a new home for residence.

There is another loan given under RHS according to the Section 503 Single Family Housing Direct Loan Program. This loan provides direct financial aid to individuals and families at affordable rate of interest from Rural Housing Service. These loans have the income of the family as the eligibility criteria. Low income to moderate income families can make use of this loan. These loans are very easy to repay since the rate is very low and the loans are usually drawn up for a period of thirty to thirty three years. This reduces the liability of monthly repayment installments to a minimum.

The government has made all efforts to help the low to moderate income group of people in rural areas to be home owners. The existences of these benefits have to be made aware for the complete success of these programs.