The United States Department of Agriculture (USDA) Rural Development operates several financial assistance programs. Each of these programs aims to improve the economy and quality of life in rural communities throughout the country. This includes home loans which are either offered or guaranteed by the USDA. Each program is designed to create opportunities for families to own safe and sanitary homes. AIM Financial offers competitive rates and terms on Michigan USDA loans throughout Grand Rapids, Allegan, Kentwood, and Wyoming.
Michigan residents can take advantage of both USDA direct and USDA guaranteed home loans. The USDA Single Family Housing Guaranteed Loan Program is meant to accommodate low to moderate-income households. The USDA insures a portion of these loans that are offered by USDA approved lenders. USDA Single Family Housing Direct Home Loans are made directly by the USDA in the form of a subsidy and are available to low and very-low income households. This direct loan program is also commonly referred to as the Section 502 Direct Loan Program.
USDA Rural Development Single Family Housing Guaranteed Loan Program
The USDA Single Family Housing Guaranteed Loan Program creates makes it possible for low to moderate-income households to purchase, build, or rehabilitate an affordable home. Loans made under this program allow borrowers to finance 100 percent of the loan, offer very low interest rates, and allow closing costs to be rolled into the total loan amount. Certain requirements must be met in order for potential borrowers to be eligible for the USDA Guaranteed Loan Program.
- Household income cannot exceed 115 percent of the median income for the area.
- The home must be used as the family’s primary residence.
- The home must be located in an eligible Rural Development area and must meet all program criteria.
- Borrowers must have an acceptable credit history and be able to afford mortgage payments, taxes, and mortgage insurance.
Two types of mortgage insurance are required with USDA guaranteed loans. There is an upfront fee of 2.75 percent of the purchase price as well as an annual premium. The annual premium is calculated at .5% of the annual mortgage balance, however it is paid in monthly installments.
USDA Rural Development Single Family Housing Direct Home Loans
The USDA Direct Loan Program provides payment assistance in the form of a subsidy to low and very-low income families. This program is geared towards families who are unable to obtain traditional financing and who are currently without safe and sanitary housing. Low income is defined by the USDA as being between 50 and 80 percent of the area median income (AMI). Very-low income is considered below 50 percent of the AMI. Both applicants and the property being purchased must meet certain requirements to be eligible for the direct loan program as well.
- Applicants must be without safe and sanitary housing, unable to obtain a loan from other resources, and meet specific income requirements.
- The home must be used as the family’s primary residence.
- The home must be located in an eligible Michigan Rural Development area. It must be 2,000 square feet or less, not have a market value in excess of the applicable area loan limit, and not have an in-ground pool.
When a borrower no longer occupies the home, or the title is transferred, the subsidy must be repaid.
USDA Direct and USDA Guaranteed home loans make it possible for Michigan families to own decent homes when alternative financing is difficult to obtain. At AIM Financial, it is our goal to make homeownership a possible for all families throughout Grand Rapids, Allegan, Kentwood, and Wyoming. For more information on Michigan USDA loans, contact us today.
