Rural Home Loans
USDA Direct Packaging
What does this program do?
Also known as the Section 502 Direct Loan program, this program assists low- and very-low-income applicants obtain decent, safe and sanitary housing in eligible rural areas by providing payment assistance to increase an applicant’s repayment ability. Payment assistance is a type of subsidy that reduces the mortgage payment for a short time. The amount of assistance is determined by the adjusted family income.
As a USDA loan packager, DHIC streamlines the this process by ensuring complete compliant, and accurate application packages are submitted to intermediaries or directly to the USDA, significantly speeding up approval times.
Who may apply for this program?
A number of factors are considered when determining an applicant’s eligibility for Single Family Direct Home Loans. At a minimum, applicants interested in obtaining a direct loan must have an adjusted income that is at or below 80% of the County Area Median income for the area where they wish to buy a house and they must demonstrate a willingness and ability to repay debt.
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Must agree to occupy the property as your primary residence
Have the legal capacity to incur a loan obligation
Meet citizenship or eligible non-citizen requirements
Not be suspended or debarred from participation in federal programs
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Be modest in size for the area
Not have market value in excess of the applicable area loan limit
Not have in-ground swimming pools
Not be designed for income producing activities
Borrowers are required to repay all or a portion of the payment subsidy received over the life of the loan when the title to the property transfers or the borrower is no longer living in the dwelling. Applicants must meet income eligibility for a direct loan.
Interested in applying for this program? Click here to view the application, and contact Lou Sivulka at lou@dhic.org at 919.832.4345 (ext. 3018)
Frequently Asked Questions
What is an eligible area?
Generally, rural areas with a population less than 35,000 are eligible.
Visit the USDA Income and Property eligibility website for complete details.
How may funds be used?
Loan funds may be 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.
How much may I borrow?
The maximum loan amount an applicant may qualify for will depend on the applicant’s repayment ability. The applicant’s ability to repay a loan considers various factors such as income, debts, assets and the amount of payment assistance applicants may be eligible to receive.
Regardless of repayment ability, applicants may never borrow more than the area’s loan limit (plus certain costs allowed to be financed) for the county in which the property is located.
What is the interest rate and payback period?
Fixed interest rate based on current market rates and loan approval or loan closing, whichever is lower.
Interest rate when modified by payment assistance can be as low as 1%
Up to 33 year payback period - 38 year payback period for very low income applicants who can’t afford the 33 year loan term.
How much down payment is required?
No down payment is typically required. Applicants with assets higher than the asset limits may be required to use a portion of those assets.
Is there a deadline to apply?
Applications for this program are accepted through a qualified nonprofit agency year round.
How long does an application take?
Processing times vary depending on funding availability and program demand in the area in which an applicant is interested in buying and completeness of the application package.