Lennox's Real Estate Blog

sharing my passion for real estate

Funding For Guaranteed Home Loan Program Available 9-8-2010

with 8 comments

The following is very good news for homebuyers who qualify for the USDA’s loan program.

Rural Development’s interim systems enhancements will be complete on September 8, 2010, at which time the Agency will begin obligating Section 502 Single Family Housing Guaranteed Loans. See the link to the notice below for more details.

Single Family Housing Guaranteed Loan Program

Section 502 loans are primarily used to help low-income individuals or households purchase homes in rural areas. Funds can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities.

Eligibility: Applicants for loans may have an income of up to 115% of the median income for the area. Area income limits for this program are here. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance. In addition, applicants must have reasonable credit histories. Approved lenders under the Single Family Housing Guaranteed Loan program include:

  • Any State housing agency;
  • Lenders approved by:
    • HUD for submission of applications for Federal Housing Mortgage Insurance or as an issuer of Ginnie Mae mortgage backed securities;
    • the U.S. Veterans Administration as a qualified mortgagee;
    • Fannie Mae for participation in family mortgage loans;
    • Freddie Mac for participation in family mortgage loans;
  • Any FCS (Farm Credit System) institution with direct lending authority;
  • Any lender participating in other USDA Rural Development and/or Farm Service Agency guaranteed loan programs.

Terms: Loans are for 30 years. The promissory note interest rate is set by the lender. There is no required down payment. The lender must also determine repayment feasibility, using ratios of repayment (gross) income to PITI and to total family debt.

Standards: Under the Section 502 program, housing must be modest in size, design, and cost. Houses constructed, purchased, or rehabilitated must meet the voluntary national model building code adopted by the state and HCFP thermal and site standards. New Manufactured housing must be permanently installed and meet the HUD Manufactured Housing Construction and Safety Standards and HCFP thermal and site standards. Existing manufactured housing will not be guaranteed unless it is already financed with an HCFP direct or guaranteed loan or it is Real Estate Owned (REO) formerly secured by an HCFP direct or guaranteed loan.

Approval: Rural Development officials have the authority to approve most Section 502 loan guarantee requests.

For more information contact your lender – or visit www.responsemortgage.com to connect with someone from our mortgage partner.

Written by Lennox

September 7, 2010 at 11:12 pm

8 Responses

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  1. Super news….hope this assists in moving the housing market forward! Thanks for all that you do!!!

    Pat McGuire

    September 8, 2010 at 10:44 am

    • Thanks, Pat – we are both hopeful for the same thing. Thanks for reading.

      Lennox

      September 8, 2010 at 3:08 pm

  2. Hi, we recently contacted a mortgage broker (last week) about a USDA home loan and were told there were no funds available. Did the funds just become available, and should we contact the broker again?

    Chelsea

    September 9, 2010 at 4:07 pm

    • Hi Chelsea – thanks so much for your comments. You are correct – as of right now there are no lending institutions funding these loans, but I am in constant contact with REALTOR and mortgage leadership and we are hoping for an update ASAP. Everyone is on pins and needles. Thank you for your comment and for reading. Please stay tuned. -Lennox

      Lennox

      September 9, 2010 at 11:12 pm

      • I will, thank you so much for responding!

        Chelsea

        September 10, 2010 at 7:43 am

  3. […] Funding For Guaranteed Home Loan Program Available 9-8-2010 (via Lennox's Real Estate Blog) By Karen Jackson Here is a post from Lennox – Chairman and CEO of John L. Scott The following is very good news for homebuyers who qualify for the USDA's loan program. Rural Development's interim systems enhancements will be complete on September 8, 2010, at which time the Agency will begin obligating Section 502 Single Family Housing Guaranteed Loans. See the link to the notice below for more details. Single Family Housing Guaranteed Loan Program Section 502 loans are primarily used to help low-income individuals or househo … Read More […]

  4. Hello,
    Has there been any changes made for USDA as of today Oct 19th?

    What is the likelihood that these funds will be released sometime this year?
    Thanks for your help. 🙂

    Nicole

    October 19, 2010 at 5:30 am

    • Hi Nicole – sorry for the delay – I’ve been trying to find out what the delay is. I’m not sure at this time, but I will follow up when I pin down the info. Thanks for reading. – Lennox

      Lennox

      October 25, 2010 at 9:39 am


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