Many families fail to acquire home loans in the US, especially those living in rural areas. This is where the USDA section 502 Direct Home Loan Program comes into the picture. The loan program assists the families with low and very low income with payment assistance and helps them obtain safe housing in eligible rural areas. Although, single-family housing direct loan is a viable option to secure new house, the applicant needs to meet certain eligibility criteria. The blog post lists a few factors you need to keep in mind while applying for direct home loans.
The USDA home loan program is for the families living in rural areas with less than 35,000 population. To be eligible for the loan, the applicant should not have a decent housing, and the income needs to be below 50 percent of the medium income of the area demonstrated. That said, the borrower needs to have a good credit history.
Use of Funds
The fund approved by the authority is not limited to buying a new home, and could also be used at several other places. An individual, for instance, could repair, build or relocate the home, and purchase sites too. You can also use the loan to provide water facilities in your area.
Maximum Loan Amount
The maximum loan amount depends on the applicant’s ability to repay the loan. Other factors such as income, debt, assets and payment assistance are also considered when deciding the repayment terms. Regardless of all the considerations and repayment ability, the applicant is restricted to borrow up to their area’s loan limits.
If you as an applicant are eligible for payment assistance, the interest rate could go as low as 1 percent. The applicants are offered an interest rate based on the current market interest rate at the time of loan approval. USDA also gives you an added benefit of payback year up to 33 and 38 years. Although, the borrowers are supposed to payback the loan in 33 years, those who are unable to do so are given the flexibility to stretch the loan term to 38 years.
Once you have applied for Direct Home Loan, it could either be instantly processed or you might need to wait for some time. The processing time entirely depends on the availability of funds for the specific area.
Direct housing home loans are a way to help individuals with very low income enjoy the benefits of owning a house. These types of homeownership opportunities are initiated to promote prosperity and improve the quality of life of the people living in rural areas. Before you apply for one of these programs, it is important to consult the right program instructor to have a fair idea of small yet important details associated with the loan program.