loans are primarily used to help
low-income individuals or
households purchase homes in rural
areas. Funds can be used to build,
repair, renovate or relocate a
home, or to purchase and prepare
sites, including providing water
and sewage facilities.
for loans may have an income of up
to 115% of the median income for
the area. Area income limits for
this program are
Families must be without
adequate housing, but be able to
afford the mortgage payments,
including taxes and insurance. In
addition, applicants must have
reasonable credit histories.
Loans are for 30 years. The
promissory note interest rate is
set by the lender.
There is no required down payment.
The lender must also determine
repayment feasibility, using
ratios of repayment (gross) income
to PITI and to total family debt.
Under the Section 502 program,
housing must be modest in size,
design, and cost. Houses
constructed, purchased, or
rehabilitated must meet the
voluntary national model building
code adopted by the state and HCFP
thermal and site standards. New
Manufactured housing must be
permanently installed and meet the
HUD Manufactured Housing
Construction and Safety Standards
and HCFP thermal and site
standards. Existing manufactured
housing will not be guaranteed
unless it is already financed with
an HCFP direct or guaranteed loan
or it is Real Estate Owned (REO)
formerly secured by an HCFP direct
or guaranteed loan.
Rural Development officials have
the authority to approve most
Section 502 loan guarantee