What is the Rural Housing Service?

Rural Housing Service otherwise known as RHS is an agency under the USDA. It is set up to offer a wide variety of programs designed for building and improving housing and essential community facilities. The office was mainly set up to help in developing rural areas by providing housing loans to qualified applicants.

The USDA Rural Housing Service offers grants, loans and loan guarantees for single- and multi-family housing, and child care centers. The government agency also provides financing for building a fire and police stations, libraries, hospitals, schools, nursing homes, first responder vehicles, and equipment as well as housing for farm laborers amongst others.

Other services offered by the RHS include technical assistance loans and grants, provided in partnership with non-profit organizations, local communities, state and federal government agencies and even Indian tribes.

The RHS with its partners, work together to ensure that rural communities in America can continue to be a fantastic place to work, live and raise a family.

rural development home loan

What is A Rural Housing Services Loan?

The Rural Housing Service helps prospective homebuyers and existing homeowners to buy or repair their home. However, such persons are required to be a low-to-moderate income household. One of the many benefits of the RHS program is that it allows people to buy property without making a down payment, with only a small amount of closing costs.

It is also worth noting that the RHS is not responsible for originating loans to rural home buyers. The agency only guarantees mortgages, in case the borrower defaults on payment. Guaranteeing the mortgage makes the borrowers less risky and consequently allowing the lending institution to offer a loan even without a down payment.

How to Qualify

The state’s Rural Development Office is usually the place where people can get all information they need. Borrowers are therefore advised to contact the Rural Development Office in their state to apply for RHS assistance.

Alternatively, lending institutions help borrowers in applying for an RHS loan. The Rural Housing Service will only guarantee loans if the earning of the borrower is less than 115 percent of the Area Median Family Income. These loans usually run for 30 years, and one of the primary requirement for qualifying for the loan is for the applicant to be without adequate housing. It is also a requirement that the borrower is buying a property located inside the USDA eligible area map. While the borrower’s credit score is not a significant factor, it is required for the borrower to have a decent credit history.

Single-Family Housing Programs

One of the loan programs offered by the United States Department of Agriculture is the Single Family Housing Programs. This program provides direct loans as well as guarantees to help families that fall into the category of low and moderate-income rural Americans. The aim of the program is to the help them in buying safe, affordable housing in designated rural areas.

The USDA also provides grants and loans for helping rural residents make healthy and safety repairs to their homes.

Multi-Family Housing Programs

The Multi-Family Housing Programs offered by the USDA provide loans designed to provide affordable rental housing for persons with very-low-, low and moderate-income. The programs also extend mortgage loans to the elderly, as well as persons with disabilities.

The funds offered in this loan program can also be used for buying and improving land as well as providing needed facilities like water and waste disposal systems. In addition to the grants and loans mentioned above, the USDA also offers rental assistance for helping eligible rural residents with their monthly rental costs.

Community Facilities Programs

The United States Department of Agriculture’s Community Facilities Programs is designed to provide loan guarantees, grants and loans for essential community facilities in rural areas. In these programs, priority is given to primary community essentials like education, healthcare, and public safety projects.

Typical projects include health clinics, hospitals, fire stations, schools, community centers, first responder vehicles, and equipment as well as many other community-based initiatives.

The Direct Loan Program

It has been mentioned earlier that the RHS does not provide direct financing to borrowers, as it only guarantees mortgage loans. However, the agency offers a Direct Loan program, where borrowers can get financing directly from the RHS at favorable interest rates.

The Rural Housing Service has helped several Americans living in rural areas to own homes and live in these areas. This has consequently led to the development of these areas. This and much more are some of the reasons for the increasing popularity and acceptance of RHS loans.