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RHS Loans
RHS Loans
The Rural Housing Service (RHS) was founded as a result of the Department of Agriculture Reorganization Act in 1994 to meet rural America's housing and community development needs. RHS offers two different types of loan programs to low and very low income families in rural areas which include:
Section 502 Rural Housing Guaranteed Loan ProgramUnder this program RHS guarantees (insures) lenders repayment in the event of a foreclosure. To qualify a family must be considered to have a low or moderate income (up to 115% of the Area Median Income), must live in a rural area, must be without adequate housing, must be able to afford the mortgage, insurance and taxes and must have acceptable credit, and must be unable to obtain a mortgage elsewhere. The terms of the mortgages guaranteed by RHS are traditional 30 Year Fixed Rate Mortgages that have competitive interest rates and require no down payment.
Section 502 Single Family Housing Direct Loan ProgramWith this program single families can receive a mortgage directly from RHS. This is one of the major differences between RHS and FHA. The funds from this type of mortgage allow families to buy, build, repair, renovate, relocate, or even refinance a home given certain conditions are met. To qualify for this loan program families must be considered low income (50-80% of Area Median Income) or very low income (below 50% Average Median Income), must be able to afford the mortgage, insurance and taxes, must have an acceptable credit history and must not be able to attain financing elsewhere. The loan terms of this program are similar to that of the Section 502 Rural Housing Guaranteed Loan Program but offer a longer amortization (repayment) period. For low income families the repayment period is 33 years and for very low income families the repayment period is 38 years.