FAQs
Consider applying with a co-applicant if there is another member of your household willing and able to be a note signer. RHS will then look at your combined income and credit when determining repayment ability. You may also consider a cosigner. A cosigner is an individual who will not reside in the dwelling, but who is willing to be responsible for the debt. You may also consider applying for down payment assistance programs in your area which provide affordable housing products. Many areas have Housing Finance Agencies, Housing Authorities, or Nonprofit Agencies which administer these programs. Funding from these sources can be combined with Rural Development loan funds.
The amount of your proposed monthly house payment, real estate taxes, insurance, and other credit debts cannot exceed 41 percent of your gross monthly income. If you have questions regarding how this determination is made, you may contact the local Rural Development Office or your Loan Packager.
A steady source of income is very important to getting a loan. An applicant must show sufficient resources to repay the housing loan. Not having a job or a stable source of income may have an impact on the Agency’s decision. Experience has shown that applicants with stable jobs and income sources are more likely to repay the loan.
Yes. Your credit report provides information on your payment history including any difficulty you have had repaying other loans or credit cards. That information will be used to determine if you can repay the loan. If you are unsure what your credit history contains, you can obtain a free credit report by calling 1-877-322-8228 or logging into http://www.annualcreditreport.com. By law, individuals are entitled to receive one free credit file disclosure every 12 months from each of the nationwide consumer credit reporting companies – Equifax, Experian and TransUnion. This free report cannot replace the credit report that the Agency will obtain to determine eligibility
Typically, applicant eligibility, loan approval, and loan closing may be accomplished within approximately 90 days of filing a complete application. However, depending on the availability of Government funding, this time-frame may be extended. The applicant is periodically advised regarding the status of their application when there is lack of funding.
When there is lack of funding, applications will be processed based on the following priorities: 1) subsequent loans to correct health and safety hazards, 2) loans to purchase homes owned by RHS and loans to transfer and assume properties owned by RHS borrowers, 3) hardships as defined by RHS, 4) loans that bring in additional resources as defined by RHS, and 5) applications that do not qualify for priorities 1 – 4. Within each priority category, veteran’s preference will be given to applicants who were discharged or released (except for a dishonorable discharge) from the U.S. active forces (regardless of the position held – administrative support, combat, mechanics, medical, transportation, etc.) and who actively served during eligible periods.
A down payment is generally not required. Loans may be made for up to 100 percent of the market (appraised) value. Simply put, this means if the sales price of the property is equal to or less than the appraised value, no down payment is needed.
Generally, the applicant will need some cash available. There are costs associated with the credit report, home inspection report, pest inspection, escrow, and other related closing costs. The credit report fee is always paid by the applicant upfront. The first year’s hazard insurance premium is paid at the time of closing. Costs pertaining to the appraisal, escrow, packaging fee, and loan closing may be included in the loan amount. You may also negotiate with the seller to contribute a percentage toward closing costs. Any agreement with the seller should be entered into prior to signing and documented in the purchase agreement or sales contract.
Yes. Rural Development staff and Loan Packagers are available to assist the applicant from the application to loan closing. The applicant is responsible for providing requested information timely. The information may be requested by Rural Development staff, a loan application packager, a real estate agent, or a closing agent. Failure to provide information timely results in delayed decisions and other actions.
Yes. The applicant must:
1. Be without decent, safe, and sanitary housing.
2. Be unable to obtain a loan from other resources on terms and conditions that they can reasonably be expected to meet.
3. Possess the legal capacity to incur the loan obligation.
4. Be a U.S. citizen, a U.S. noncitizen national, or a qualified alien and provide
acceptable evidence of qualified alien status.
The maximum repayment period is 33 years and, under certain conditions, 38 years. The maximum repayment period for manufactured homes is 30 years.
Houses must be located in a rural area, on desirable sites with an adequate supply of safe drinking water and suitable arrangements for sewage disposal. Streets must have an all-weather surface and be maintained by a public body or a homeowner’s association.
The applicant/borrower is responsible for hiring a qualified inspector to conduct a whole house inspection on an existing property and for making inspections necessary to protect their interests. While a Rural Development staff member or designee may inspect a property during and/or following construction or repair, these inspections do not create or imply a warranty or guarantee on the condition of the property.