$40 million available for Rural Development home loans

An extra $35 million for mortgages is available through the US Department of Agriculture (USDA), thanks to the federal stimulus package. The problem is many consumers are unaware of the USDA Rural Development’s Direct Homeownership Loan Program.

Frank Wetherhold, housing program director in the USDA’s Harrisburg office, said, “Most people know about our Rural Development Guaranteed Mortgages. We have obligated over $327 million this year, but we may be out of funds by the end of April. The administration and congress are fully aware of the situation and are exploring alternatives. With the Direct Home Mortgages, we are the lender and we have more than $40 million we would like to obligate before September 30.”

The Direct Homeownership Loan Program offers home loans to lower-income individuals who are unable to obtain credit elsewhere, with interest rates as low as one percent and no down payments. Mortgage payments are based on income and are made to families with incomes below 80 percent of the median income level of the communities in which they intend to live. If a consumer has minor credit issues, Rural Development may still be able to work with him.

“Over the years, we have made the 502 Direct Program more user friendly; applicants are pre-qualified for a mortgage up to a specific dollar amount. The loan processing time between the signing of a sales contract and the loan closing is comparable to conventional financing,” Wetherhold said.

“This program is a win-win for everyone,” he added. “Sometimes financing a home in rural areas is difficult because jobs pay less than in larger areas and people are often self-employed, making it harder for them to obtain credit.”

Thirty-three of Pennsylvania’s 67 counties are totally eligible for the Direct Homeownership Loan Program. Philadelphia and Delaware counties and most of Allegheny County are not eligible. A map on the USDA’s web site allows consumers to determine whether their county is an eligible area or a specific address can be entered into the system to determine eligibility.

To find the office near you, click here.

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Tags: development, home, loans, rural, usda

This entry was posted on Tuesday, April 20th, 2010 at 6:00 am and is filed under Economics, Industry News. You can follow any responses to this entry through the RSS 2.0 feed.