Building a Community with USDA Rural Development Homeownership

Building a Community with USDA Rural Development

Homeownership for Individuals and Families Single Family Home Loan--502 Direct This program assists low and very low income applicants in obtaining a decent, safe, and sanitary housing in eligible areas. • Modest, generally 2000 sq. ft. or less, direct loan area limits • Applications accepted year round. FY 18: $1. 1 billion available Benefits of Program: • USDA is your Lender • Fixed low interest rate (currently— 3. 75%); potential for subsidy (interest rate 1%) • No down payment • Lend up to 100% value of home • Extended payback term (30 -38 yrs. ) 2

Single Family Home Loan— 502 Direct Qualifications: Location • Home must be in an eligible rural area. Rural areas generally include places with population of 10, 000 or less (some exceptions). • Tribal Trust lands are eligible. • Eligibility can be checked at: • http: //eligibility. sc. egov. usda. gov/eligibility/welcome. Action. do 3

Single Family Home Loan— 502 Direct Qualifications: Income and Assets • Applicants must meet income eligibility requirements— Low Income Program • Adjusted income that is at or below the applicable lowincome limit for the area where applicant(s) wish to buy a house • Debt: Debt will also be reviewed prior to processing. Debt ratio of 41% or less of your income (must include mortgage payment) 4

Single Family Home Loan— 502 Direct Qualifications: Credit (prefer 640 or above) • Not only contingent on credit score • Non-Traditional credit may be utilized: • Insurance, utilities, rent • Unacceptable credit can include : • Collection Accounts • Delinquency on accounts of more than 30 days in the previous 12 months • Foreclosure, Bankruptcy within the last 36 months 5

Homeownership for Individuals and Families Single Family Home Loan Guarantee --This program assists modest income applicants in obtaining a decent, safe, and sanitary housing in eligible areas. • USDA RD provides a 90% loan note guarantee to approved lenders --reduce risk of extending 100% loans to eligible rural homebuyers. • Applications accepted year round. FY 18: $24 billion available Benefits of Program: • 100% financing of appraised home value • No Max. Purchase Price • No private mortgage insurance— 1. 00% guarantee fee and 0. 35% annual fee • No Down Payment • No Area Loan Limits 6

Single Family Home Loan Guarantee Loan may be used for: • Existing home • Modular • Condominiums • New Construction • Townhouses • New Manufactured Homes Site Requirements: modest and in accord with state/local standards • Site size typical for the area • No income producing buildings or land (residential) • Adequate utilities (water/wastewater) 7

Single Family Home Loan Guarantee Qualifications: Credit • Flexible Credit Guidelines • 2 eligible trade lines (12 mo. pay history) • Non-Traditional Credit • Lender may provide when applicant doesn’t have credit history (12 mo. car, insurance, phone, utility) • Not limited to first time homebuyers • No down payment • Credit Scores of 680 or higher (some exceptions) • Under 679 may require credit exemption • Total Debt Ratio of 41% or less 8

Single Family Home Loan Guarantee • Applicant works directly with approved guaranteed lender to obtain loan and negotiate interest rate. • Typical loan is 30 yr. term with fixed interest rates. Lender Responsibilities • Interview applicant • Submit application to their underwriter • Submit approved underwritten file to RD for conditional commitment • Close loan • Submit loan closing packet to RD for loan note guarantee USDA RD Responsibilities • Review the file for compliance • Review the appraisal for compliance • RD issues conditional commitment or denial • RD issues loan note guarantee 9

Rehabilitation Funding For Existing Homes Home Repair--504 Loan & Grant Programs With a 504 Loan and/or grant you can: • Fix a roof • Replace windows or doors • Add insulation • Repair a bathroom • Repair heating and electricity • Repair a well or septic tank • Make a home handicap accessible • May make an application year round. • FY 18: $30 million in grants and $28 million in loans available 10

Home Repair— 504 Loan & Grant • Loan Program: This program assists very-low-income homeowners with a loan to repair, improve or modernize their home. • Max. Loan: $20, 000; Grant/Loan Combo: Max: $27, 500 • Interest Rate Fixed: 1%--Repayment over 20 years • Loans less than $7, 500 secured by note only • Grant Program: One time grants to individuals (62+) very-low-income homeowners to remove health and safety hazards in their home. • Max. Grant: $7, 500 • Qualifications: • Income (age for grant) • Credit & Asset Requirement • Repayment Ability • Ownership of Property 11

Multi-Family Housing Loan Guarantees • Loan Program: This program works with private-sector lenders to provide financing to qualified borrowers to increase the supply of affordable rental housing for low and moderate income individuals and families in eligible rural areas. • Who May Apply: Private Lenders may apply for a loan guarantee on loans made to an eligible borrower who is unable to obtain commercial credit on reasonable terms without the guarantee. Lenders must be approved and active in one of the following programs: Fannie Mae, Freddie Mac, Ginnie Mae, HUD, Federal Home Loan Bank members or State or local housing finance agencies. • Borrowers May Include: • State and local governmental entities • Nonprofit organizations • For-profit organizations, including LLC’s • Federally recognized Tribes 12

Multi-Family Housing Loan Guarantees • Funds Usage: Funds by be used to construct, improve and purchase mult-family rental housing for low to moderate income families and individuals. Funds may also be used to buy and improve land or provide necessary infrastructure. For more information refer to the Code of Federal Regulations, 7 CFR Part 3565. 205. • Terms: • USDA offers guarantees of up to 90% of the loan amount • For-profit entities may borrow up to 90% and non-profit entities may borrow up to 97% of the total development cost or appraised value, whichever is less. • Minimum term of 25 years and a maximum term of 40 years • Interest rate is negotiated between the lender and the borrower and is fixed for the life of the loan guarantee • Servicing: Loans guaranteed through this program are serviced though the private lender that makes the loan, just as they would be without a guarantee. 13

Housing Preservation Grants • Grant Program: This program provides grants to sponsoring organizations for the repair or rehabilitation of housing occupied by low and very low income people. • Who May Apply: • Most State and Local Governmental Entities • Nonprofit Organizations • Federally Recognized Tribes • Funds Usage: • Repair or replace electrical wiring, foundations, roofs, insulation, heating systems and water/waste disposal systems • Handicap accessibility features • Labor and materials • Administrative expenses • A complete list can be found in the Code of Federal Regulations (CFR) 1944. 664 14

Providing Water & Waste Disposal Infrastructure in a Community Water & Waste Disposal Grants to Alleviate Health Risks— ”Native American Set Aside of 306 C” • Funding for construction of basic water and/or waste disposal systems. • Eligible applicants include Federally recognized Indian tribes. • Project must be in eligible area—most Tribal Trust lands are eligible. • Applicants must meet per capita income and unemployment rate guidelines. • FY 18: $25 million available AMERIND - NAIHC 2018 Annual Convention Pueblo Place Housing Project-Jemez Pueblo 15

Providing Water & Waste Disposal Infrastructure in a Community Water & Waste Disposal Loan & Grant • Funding for clean and reliable drinking water systems, waste disposal and storm water drainage to household and businesses in eligible areas. • Eligible applicants include Federally recognized Indian tribes. • Project must be in eligible area—most Tribal Trust lands are eligible. • Long-term, low interest loans available—useful life of the facility financed up to 40 yrs. • If funds are available a grant may be combined with a loan to keep user costs reasonable. • SEARCH and Pre-development & Planning (PPG) Grants • FY 18: Direct Loans - $4. 1 Billion, Guaranteed Loans - $542 million, Grants - $769 million • Loan Grant Ratios AMERIND - NAIHC 2018 Annual Convention 16

Samantha Martinez Single Family Housing Program Director Rural Development Samantha. Martinez@nm. usda. gov Office: (505) 761 -4941 www. rd. usda. gov Lynn Trujillo Native American Coordinator Rural Housing Service Lynn. Trujillo@wdc. usda. gov Office: 505 -761 -4959 www. rd. usda. gov 17