USDA’s Rural Home Loan Program: What Realtors® should know

Last year, the United States Department of Agriculture (USDA) had $1.3 million in unrealized Realtor® commissions at the end of the year. And this year, there is just as much funding, with few applicants yet again.

If you are a Realtor® in the rural parts of Pennsylvania, USDA’s Rural Home Loan Program could be a huge business boost.

The program, also known as the Section 502 Direct Loan Program, assists applicants with low and very low income acquire housing in eligible rural areas.  The program provides payment assistance, which is a type of subsidy, that reduces the mortgage payment for a period of time.

Housing Programs Director David Corwin, said: “Basically, when Realtors® get a client who is low income, whether they couldn’t get a loan through the bank or enough of a loan, that’s who fits into our program.”

To qualify for the program, Corwin said it’s nearly identical to the popular guarantee program. Applicants must meet income eligibility to apply.

“If someone just doesn’t make enough money, this is subsided so the government is helping to make their payments. Depends on how much they make, they can pay as low as 1 percent,” he explained, noting the government pays the difference.

According to the program’s guidelines:

Applicants must:

• Be without decent, safe and sanitary housing
• Be unable to obtain a loan from other resources on terms and conditions that can reasonably be expected to meet
• Agree to occupy the property as your primary residence
• Have the legal capacity to incur a loan obligation
• Meet citizenship or eligible noncitizen requirements
• Not be suspended or debarred from participation in federal program

Properties financed with direct loan funds must:

• Be modest in size for the area
• Not have market value in excess of the applicable area loan limit
• Not have in-ground swimming pools
• Not be designed for income producing activities

A person can come in and out of the subsidy due to their income, which is reviewed annually, but they will not be kicked out of the program, even if they do land a higher-paying job.

“The biggest point is Realtors® letting it known to them, if their clients just can’t just get qualified with a bank, this is where they should be looking,” said Corwin.

Corwin said there are specialists available to work with the client and the Realtor® to work out the logistics.

“As far as a Realtor® is concerned, we are the bank. There is no difference how a Realtor® will operate, just treat the government like the bank,” he said.

For more information, visit their website.