guaranteed rural housing - iowa community action

USDA Rural DevelopmentSingle Family Housing Programs

502 Direct Loan Program

502 Direct Loan Program Mission

Serve Very Low and Low income applicants

Obtain a decent, safe, and sanitary dwelling In eligible RURAL areas, populations < 20,000 people

Purchase, build, and/or repair a dwelling New dwelling, existing dwelling, repairs

Assist those who have insufficient resources to obtain housing elsewhere

United States Department of Agriculture

Rural Development

502 Direct Loan Benefits

100% financing

No down payment required, unless over non-retirement asset limit

Non-elderly household limit = $15,000

Elderly household limit = $20,000

Fixed loan term: 33 or 38 years

Interest rates established monthly by N.O. Fixed rate after loan closes


Rural Development


Payment Assistance/Subsidy is Available:

May reduce effective IR to as low as 1%

Reduces eligible applicant’s required monthly payment

Based upon household income

Subject to recapture if: Property is sold

Owner transfers title/no longer occupied

Once the loan is PIF


Rural Development


$220,532 maximum mortgage limit statewide

Some closing costs may be included above appraised value

No PMI required

Real estate taxes and insurance are escrowed

Not limited to first time homebuyers

Partner with other funding sources

Work with USDA staff through

entire process


Rural Development

Income limits = based on household size & county interested in

Applicant must have an acceptable credit history

Show repayment ability for loan amount requested

No acreages or income producing property

Not own another home @ the time of loan closing

Program is centralized = team of 9

Lots of money available!!

502 Direct Loan Facts


Rural Development

Application Process Overview

• Applicant submits application to Rural Development for processing

• Rural Development processes application & determines eligibility

• Rural Development issues a Certificate of Eligibility

• Applicant completes Homebuyer Education course


Rural Development

• Applicant enters into a sales contract

• 3rd party inspector inspects the property – figure out repairs

• Appraisal is contracted out by RD

• Loan obligated and approved with RD • *Currently obligating subject to appraisal once a PA is received

• Attorney closes loan


Rural Development

Application Process Overview

[email protected]

Phone: 515-284-4444

Fax: 855-415-3562

210 Walnut Street

Room 873

Des Moines, Iowa 50309

Iowa Direct TeamContact Information

mailto:[email protected]

Guaranteed Rural Housing (GRH) Program

Guaranteed Loan Program Mission

Serve Low and Moderate income applicants

Obtain a decent, safe, and sanitary dwelling

Acquire, build, rehabilitate, improve, or relocate a dwelling In eligible RURAL areas, populations < 20,000 people

Insufficient resources to obtain housing

Unable to secure necessary credit from other sources with reasonable terms/conditions without a guarantee


Rural Development

Guaranteed Loan Benefits

100% financing

No purchase price limits

Determined by applicant’s repayment ability

30 year loan term – lender sets interest rate

No reserves required

No down payment

No PMI required

Not limited to first time homebuyers

No restrictions on size or design of dwelling


Rural Development


Closing costs, repairs, & improvements may all be financed

Can be combined with other housing programs

Can loan on acreages, as long as not income producing

Outbuildings = acceptable, as long as not income producing

Interior/Exterior repairs can be escrowed

Can retain a home and purchase a new one, as long as current home no longer adequately meets application’s need


Rural Development


90% Loan Note Guarantee

(USDA provides up to a 90 percent guarantee to the lender on

qualifying loans, reducing the lender’s risk in the event of a default by the borrower)

Original principal loan amount $150,000

Maximum loss claim payout $135,000


Rural Development

Income limits = 2 tiered, depends on county interested in

Adequate & dependable income

Reasonable credit history

Have ratios that fall within the 29% (PITI) and 41% (TD) limits

Centralized GRH Program = team of 5

Plenty of money available!

Guaranteed Loan Facts


Rural Development

Annual & Upfront Guarantee Fee

GRH Loans are subject to reduced fees as of October 1, 2016:

• Upfront guarantee fee (1.0%)• Non-refundable

• May be passed onto the borrower

• Can be loaned above the appraised value

• Annual fee (.35%)• Based off the annual scheduled unpaid principal balance of the loan for the life of

the loan

• May be passed onto the borrower

• May be escrowed


Rural Development

Overview of GRH Process

Applicant makes application with an approved GRH lender

Lender applies to USDA RD for a guarantee on the loan

RD Reviews application for: Completeness

Eligible applicant(s), income, property, loan purpose

Assurance of repayment ability

Sufficient collateral

Environmental review

RD obligates loan funds

RD issues ‘Conditional Commitment’ to lender within 24-48 hours of receiving complete application


Rural Development

[email protected]

Phone: 515-284-4667

Fax: 855-415-3562

210 Walnut Street

Room 873

Des Moines, Iowa 50309

Iowa GRH TeamContact Information

mailto:[email protected]

504 Loan & Grant Program

504 Program Objective

Serve very low-income owner occupants of modest single family homes make necessary repairs to their homes


Rural Development

Very Low Income Limit

Own Home

1% loan up to 20 years

$20,000 outstanding at one time

Grant for those over 62 years of age

Remove Health & Safety Hazards

$7,500 lifetime limit

504 Program Facts


Rural Development

Loan funds are available to:• Improve or modernize a home

• Make the home safer or more sanitary

• Remodel the home to make it more accessible for household members with disabilities

Grant funds are available to:• Remove health & safety hazards

• Remodel the home to make it accessible for household members with disabilities

Identified health and safety hazards should be separated and documented specifically from the loan improvements and other sources of partnership funds

504 Eligible Purposes


Rural Development



Rural Development

storm doors,

windows,

roof,

structural support,

water heater,

electrical, plumbing,

furnace,

steps,

handrails,

water and sewer systems,

insulation,

accessibility items such as a ramp, high rise stool, grab bars, bathtub/shower modifications, etc.

Repairs to manufactured homes:

• Applicant must own the home and the site

• Repairs must remove health or safety hazards

• Home must be on a permanent foundation or put on a permanent foundation with 504 funds



Rural Development

Applicant MUST:

• Be very low-income

• Own and occupy the dwelling, leasehold must have an unexpired term of 2 years beyond the term of the note or grant agreement

• Have a credit history that indicates a reasonable ability to meet debt obligations

• Be 62 or older to qualify for a grant

Applicant Eligibility


Rural Development

Our team would be happy to schedule a time to meet with you or schedule a teleconference to continue this conversation about what our program has to offer. Thank you for all you do in our district/area and I look forward to working with you.


Rural Development

“Committed to the future

of rural communities”

Iowa Rural Development Offices


Rural Development

504 applications are processed by the USDA Rural Development office serving the area where the home is located

Iowa RD Office Contacts


Rural Development

504 applications are processed by the USDA Rural Development office serving the area where the home is located

Albia 641-932-3031Atlantic 712-243-2107Humboldt 515-332-4411Indianola 515-961-5365Iowa Falls 641-648-5181 LeMars 712-546-5149Mt. Pleasant 319-986-5800Storm Lake 712-732-1851Tipton 563-886-6006Waverly 319-352-1715

THANK YOU!!

The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national

origin, age, disability, and where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, genetic

information, political beliefs, reprisal, or because all or part of an individual’s income is derived from any public assistance program. (Not all

prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information

(Braille, large print, audio tape, etc.) should contact USDA’s TARGET CENTER at (202)720-2600 (voice and TDD). To file a complaint of

discrimination write to USDA, Director, Office of Civil Rights, 1400 Independence Avenue, S.W., Washington, D.C. 20250-9410 or call

(800)795-3272 (voice) or (202)720-6382 (TDD). USDA is an equal opportunity provider and employer.

guaranteed rural housing - iowa community action

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