RHS Making No-Down, 1% Loans Available

September 1, 2015

Rural households often face significant hurdles to obtaining mortgage financing, in part because there simply aren't many lenders in sparsely populated areas. Incomes are often low as well.

That's why a little-known program of the U.S. Rural Housing Service is something you might want to let home buyers know about. The agency's Sec. 502 direct loans are intended for low-income households (50-80 percent of area median income) who live outside population centers and haven't been able to obtain financing from conventional lenders. The loans are made directly by the agency and come with zero-down, 1-percent financing terms.

Home buyers can apply any time for a loan, but with the agency's fiscal year winding down, now might be a good time to do it. The agency says it has enough funds available under its current budget authority to make about 2,500 loans until the end of September, when the federal fiscal year ends. More information about the program is at the RHS website.

The Sec. 502 program is the lead topic in NAR's  online news video, The Voice for Real Estate, for the week of August 24. The video also looks at the return of community banks to the commercial real estate market, which is helping smaller commercial deals get financing, and the federal government’s online guide for understanding closing process changes that start Oct. 3. The Consumer Financial Protection Bureau created the guide to help real estate professionals help their clients navigate the new closing rules.

—By Robert Freedman, REALTOR® Magazine