Farmer home loan
farmer home loans are those loans that are offered to farmer s and other qualified rural people for buying residential real estate. farmer home loans have played an important role in the development of rural areas. In United States, farmer home loans are administered by USDA or U.S. Department of Agriculture. There are many types of financial programs that support housing sector in rural areas. These can be divided into single family housing programs and multifamily housing programs. Each of these categories comprises different types of farmer home loans.
In single family housing category, rural housing guaranteed loan is one of important farmer home loans available. Section 502 loans offered under this category are used for helping low income people and households in buying home s in rural areas. loan amount can be used for building, repairing and renovating home. loan can also be taken for relocating home or for buying sites and preparing them. For getting this type of farmer home loan, it is required that income of borrower is up to 115% of the median income of the particular area. Area income limits have been prescribed. It is also required that families are without adequate housing facilities.
Borrower must be able to afford the monthly payments that include insurance and taxes also. As far as credit rating or history is concerned, it is required that borrower has reasonable credit history. There are many types of lending agencies that have been approved for this type of farmer home loan. These include state housing agencies, lenders that have been approved by HUD under Federal Housing Mortgage Insurance. Lenders approved by U.S. Veteran Administration, Fannie Mae and Freddie Mae can also participate in above loan program. Apart from above, any farm credit system institution that has direct lending authority and lenders participating in USDA Rural Development program are also eligible to apply for the loan. loan term allowed is 30 years and the promissory note interest rate is determined by the lender. There are no down payment requirements. Repayment feasibility is determined by the lender through ratios of gross income to PITI as well as to overall family debt. Housing unit must be modest with respect to design, size and cost. All standards provided by HCFP must be met. New housing units should be installed permanently and meet the HUD standards.
Rural Housing Direct loan is another option available under farmer home loans in United States. These loans are provided directly by the government and are offered to people with low and very low income levels. Main objective is to help such individuals in gaining home ownership. 100% finance is provided for purchasing existing home s, sites and dwelling places. Newly developed dwelling located in the rural areas across U.S can also be bought. Mortgage payments are found out on the basis of adjusted income of household. These loans are popularly called as 502 Direct loans. loan amount can also be used for repairing or renovating residential unit and for development of site.
Regarding eligibility, it is required that borrower has low or very low income, which has been defined as 50% of the AMI or area median income. Families must not have any adequate housing facility and should be able to support the mortgage payments. For enhancing the repayment ability of borrower, payment subsidy is also provided. It is also required that borrower is not qualified for obtaining credit from other institutions but should have reasonable credit history. These farmer home loans are offered for term of 33 years and for those people whose incomes is less than 60% of AMI, loan term offered is 38 years. For manufactured home s, this term is 30 years. Interest rates on promissory note are determined by the HCFP on basis of cost of money for government. Interest rate is also modified through payment assistance subsidy. Approval is necessary for getting rural housing direct loan and concerned officials should take a decision within 30 days of receipt of application.
Housing Repair and Rehabilitation loan is also offered under farmer home loans. These loans are also funded directly by the government and are offered to people in rural areas with very low income. Amount is offered for repair and rehabilitation and for modernizing home s. This loan is offered as 1% loan and can be repaid over a time period of 20 years. Borrower should own a dwelling unit and must not be qualified to get credit from any other institution. People who are more than 62 years of age and are not able to repay loan under Section 504 can go for grants. Maximum loan amount is $20000 whereas maximum grant size is $7500.
Other types of single family farmer home loans apart from above include self help technical assistance grants, rural housing site loans, mutual self help loans, individual water and waste grants, etc.
Under Multi family housing loans, Farm Labor Housing loans and Grants occupy important position. These loans are offered for the development of home s for farm laborers. loan amount is offered to farmer s and associations of farmer s. Apart from this, Indian tribes, association of farm workers, family farm corporations and non-profit organizations are also eligible to get the loan amount. These loans are offered for buying, improving, repairing and building housing units for farm laborers.
People earning income through aquaculture and on farm processing are also included in the category of farm laborers. loan amount can also be used for purchasing site or for purchasing durable household furnishings. loan term is 33 years and loans are offered at 1% interest. Grants are offered up to 90% of development costs. District Director has been provided power for approving loans up to $100000 for individuals. State Director can approve loan up to $400000.
Other types of farmer home loans offered under multi family housing category are rural rental housing loans, housing preservation grants, rental assistance program and guaranteed rental housing programs.
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