The federal government spends millions to help rural residents become first-time homeowners
Every year, the federal government spends millions to help rural residents become first-time homeowners. If you're purchasing a home in a rural area, you may qualify for grant programs that eliminate your down payment, reduce your monthly mortgage bills or fund repairs for your new property. These grant programs are designed to help rural home buyers that do not qualify for traditional loans due to low income, poor credit or a limited work history.
Mutual Self-Help Housing Program
The Mutual Self-Help Housing Program offers payment assistance grants to rural families in exchange for hard work. A group of home buyers works as a team to build a home for each participant, with guidance from qualified construction supervisors. After the construction is complete, buyers are given a subsidized mortgage with payments no more than 22 to 26 percent of their income. With the grant, there is no down payment and the interest rate may be as low as 1 percent. To qualify, applicants must have a low income and be unable to secure adequate housing on their own.
Rural Housing Direct Loan Program
Through the Rural Housing Direct Loan Program, rural home buyers can get a low-interest, no-down payment loan directly from the government's Housing and Community Facilities organization. Grants are also available that subsidize the monthly payment for those that cannot afford these loans over a 33 or 38 year term. To qualify, applicants must demonstrate that they have inadequate housing, low incomes, and the inability to receive credit elsewhere.
Rural Development Guaranteed Housing Program
Through the Rural Development Loan Guarantee Program, rural home buyers can take out a mortgage from a private lender for up to 100 percent of the home's value. The Rural Development guarantee makes it possible for residents to become homeowners without having to save for the usual 20 percent down payment and without having to pay mortgage insurance. To qualify, applicants must show they do not have adequate housing and that their income is no more than 115 percent of the median in their area. Many major lenders such as Wells Fargo and Bank of America participate in this program. Ask your local lender for the USDA Rural Development Guaranteed Housing Loan.
Home Repair Loan and Grant Program
New homeowners who find their properties in need of repair may apply for a grant or low-interest loan through the Rural Housing Repair and Rehabilitation Program. These funds can be used to modernize a property, improve safety conditions, or make it accessible to people with disabilities. To qualify, all applicants must demonstrate a very low income. Grant applicants must be over the age of 62 and unable to pay back a loan with a 1 percent interest rate over a 20-year period.
Homeownership Voucher Program
Many rural home buyers also qualify for mortgage vouchers from their local Public Housing Agency. Vouchers subsidize the cost of homeownership, limiting mortgage payments to approximately 30 percent of the buyer's income. To qualify, applicants must demonstrate a low income and one year of full-time employment.
Tags: applicants must, qualify applicants, qualify applicants must, home buyers, Rural Development, rural home
