The Rural Housing Service or RHS was created in the mid 1990s, so rural America could have their housing development needs met. The RHS program helps rural families and individuals become homeowners.
What A Rural Housing Services Loan Is
The RHS can help you buy or repair a home, if you’re a low- to moderate-income rural resident. The RHS program can help you buy property without paying a down payment and with only a small amount of closing costs.
The RHS program does not supply money for rural homeowner loans. Instead, they insure the loan, in case you would default. By insuring the loan, the lender has less of a risk by lending you money, so they can offer you a loan with no down payment and with little closing costs.
How You Qualify
You can contact your state’s Rural Development Office directly to apply for RHS assistance. Or your lender can help you apply for an RHS loan. The RHS will insure your rural mortgage only if your earnings are less than 115 percent of the Area Median Family Income. RHS loans are typically for terms of 33 or 38 years. The other major qualification for obtaining an RHS loan is that you must currently be without adequate housing and you must be unable to get credit for a home loan anywhere else. At the same time, you must have a reasonable credit history.
The Direct Loan Program
The RHS also offers a Direct Loan program to those who have extraordinarily low income levels. This program allows you to borrow directly from the RHS at a favorable interest rate. Your income level must be less than 50 percent of the Area Median Income. No down payment is required, but in order to qualify for a mortgage you will have to be able to afford your payments as determined by the RHS.