If you’re looking to buy a home, the United States Department of Agriculture (USDA) Rural Development department just may have the right loan for you and they’re not talking farmland.
(USDA) Single-Family Housing Specialist Delbert A. Virchow addressed area real estate agents about home loans April 21 at Cass County Bank.
Virchow explained the mission of USDA Rural Development as being “committed to helping improve the economy and quality of life in rural America. Through our programs, we help rural Americans in many ways.”
Rural Development offers loans, grants and loan guarantees to support services such as housing, economic development, health care, first responder services and equipment, and water, electric and communications infrastructure.
“We provide technical assistance to help communities undertake community empowerment programs. We help rural residents buy or rent safe, affordable housing and make health and safety repairs to their homes,” he said. “We do this all with less than 50 people including administrative staff. Taxpayers really get a good bank for their buck.”
In the past 20 years, USDA Rural Development has provided $3 billion to rural Nebraska, Virchow said.
Two types of home loans are available through Rural Development: direct home ownership loans and guaranteed home ownership loans.
“With a Direct Loan 502, the applicant applies directly to the USDA. “We give the money, 100 percent financing, for the low rate currently at 3 percent,” Virchow said. “These are 33-year loans.”
For a direct home loan, the purchase, construction, repair and rehabilitation of a single family home in rural areas must be used for the applicant’s permanent residence. “For manufactured housing, only new construction can be funded,” he explained.
Credit scores of 640 or greater are typically acceptable with a minimum number of trade liens that have been open and active. Credit scores below 650 may required additional credit analysis.
“No down payment typically is required,” he said. “Loans may be up to 100 percent of the appraised value. Homebuyer education is required prior to closing.”
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Virchow explained, however, that modest housing based on area loan limits established by the agency per county and consideration for the size of home “should typically not exceed 1,800 square-feet above grade living area.”
Mortgage payments are based on what the applicant can afford to pay. USDA offers payment assistance/subsidies to make it affordable.
Guaranteed home ownership loans “assist eligible applicants in rural areas purchase or construct a home as their primary residence.”
Applicants must be a U.S. citizen or eligible noncitizen with permanent residency. Applicants must have an income below the moderate-income limit (115 percent of the median), meet acceptable credit requirements and have adequate repayment ability.
Again, a credit score of 640 or higher is acceptable.
“Loans are made through approved lenders such as Cass County Bank,” he said. “The interest rate is negotiated with the lender.”
These 30-year-fixed rate loans are for those in the moderate income bracket. Loans may be up to 100 percent of the market value of the home and can include repairs and typical closing costs not to exceed the appraised value.
There are no maximum mortgage or loan limits with Guaranteed Home Ownership Loans.
“There is no asset limit for these loans. We have done 300,000 loans with this program,” Virchow said.
The loans are not just for first-time buyers.
For more information about these loans, contact Virchow at 402.437.5553.