A direct loan helps the applicant with part of the payment of the mortgage. It is similar to a subsidized payment that lowers the applicant's mortgage payment amount for a limited time. The household must meet certain income requirements in order to qualify. That includes an adjusted income that is less than or equal to the low-income limit set for the location where the home is situated. The family must also show that they are willing and able to pay back a loan.
The money from the assistance can be used for a purchase of a home site. It can be applied to an existing site that the family wishes to build on, to fix up or improve, or to relocating a home.
The family must show that without the assistance, they will not have housing that is sanitary and safe. They must show that they do not qualify for any other types of loans. The family must reside on the property as their primary residence, not as an income producing property. They must meet requirements as a citizen or non-citizen. They must be legally able to enter into a loan agreement.
A guaranteed loan program is a little different. This program offers help to approved lenders by guaranteeing 90% of the loan made to eligible applicants. This significantly lowers the risk carried by the lender who, otherwise, would have to shoulder 100% of the risk. The home buyer can use the loan to purchase a new dwelling or to improve their existing home. It can be used to refinance an existing loan that is eligible. The eligibility requirements for the applicant are similar to those for direct loan applicants.
The funds can be used in a variety of ways that will improve the living conditions of the household. That includes the installation of basic utilities like water, electricity, gas, or sewer. The money can go toward the purchase and installation of essential household appliances and a heating/cooling system. It can be used to improve the landscaping of the home. It can be applied to improvement projects that will promote energy efficiency.
USDA loans greatly improve the ability for rural families to live in a decent and safe environment. More details on these loans are available on the USDA rural development website.
