December 8, 2023

Epic Law

The Law Folks

Many Routes To Home Ownership

Purchasing the family home can be daunting when faced with high prices while working for low wages. The minimum wage in America has doubled since the 1970’s while housing prices generally rose to 10 times the amount between the 1970s and 2006 comparatively. There are little publicized options for home loans that can help many people to deal with this inflation problem and own their own home.

Here are some facts that can help people find the assistance they may need:

1. The USDA administers Rural Development Loans- also known as the USDA Rural Development Guaranteed Housing Loan Program. This is a housing loan vehicle for application in rural areas of the United States. Such loans may even require no down payment. These loans are limited for applicants that meet specific requirements such as: Income must not exceed 115% of the median income for the area. Families must be able to afford the mortgage payments. In addition, applicants must have reasonable credit histories. The property must be located within the USDA RD Home Loan “footprint” which is proximity designated by population densities. Due to how the USDA defines “rural”, there are plenty of places, some that may even be close to metropolitan areas, in which USDA loans can be used. The USDA also administers variations of such loans- There are the Section 502 loans that are primarily used to help low-income families purchase homes in rural areas. These loans can be used to build, repair or renovate a home, or to purchase land to build the home on. Applicants for such loans must have a low income that is between 50% and 80% percent of median income for the area. Subsidies are available to assist families to make the mortgage payments. Applicants must be unable to obtain credit elsewhere, yet have reasonable credit. Another variation of USDA Rural Development Loans is the Rural Repair and Rehabilitation Loan program, also known as the Very Low-Income Housing Repair program. This program provides loans to very low-income people in rural areas to repair, improve, or modernize their dwellings or to remove health and safety hazards. Grants are available to homeowners who are 62 years old or older. Such grants do not have to be repaid. The USDA does not administer these home loan programs to enrich people by providing a vehicle whereby they might obtain a home at more favorable terms and turn around and sell it for a high profit. Built into such loan terms are caveats that incentivize buyers to remain in the homes and also provide for the USDA to recover costs should the buyers elect not to do so. To access more information on USDA Home Loan practices go to the USDA government website Rural Development section or just use the search term “USDA Home Loans”.

2. Hud’s 203k Rehab Program- According to HUD “The Section 203(k) program is the Department’s primary program for the rehabilitation and repair of single family properties. As such, it is an important tool for community and neighborhood revitalization and for expanding homeownership opportunities.”- HUD Website. These rehab loans are rolled together with the long-term mortgage loan, thus avoiding short term high interest rehab loans. Once the repairs are completed HUD endorses the mortgage to make it more attractive to lenders. Bottom line is the lender ends up with a fully-insured mortgage loan, which makes it easier for borrowers to obtain the mortgage loan. These loans are not for building new homes- the home has to be at least one year old. Such loans can be used to demolish structures as long as the foundation remains to build on. HUD specifies that such funds can also be used to convert a one-family dwelling to a two-, three-, or four-family dwelling, or an existing multi-unit dwelling could be decreased to a one- to four-family unit (same citation as above). Of course HUD does not make these funds available for people to make luxury improvements to their homes. Health and safety improvements are funded first and foremost. Then the homeowner can use the 203(k) program to finance such items as painting, room additions, decks and other items.

3. The Rural Housing Service (RHS) is part of the USDA. It operates programs that were formerly administered by the Farmers Home Administration. Not to be confused with the section 502 loans referenced in #1 above the RHS administers, among other things, section 533 programs, which are designated as Rural Housing Preservation Grants. Such grants are reserved for very low income households, landlords, or those belonging to co-ops who reside in areas that the meet the government definition of rural. The grants can be made to sponsors that include nonprofit organizations as well as local government agencies, and faith-based organizations to assist low income households in repairing and rehabilitating their homes. By researching through the RHS you may be able to identify sponsors that can help. Go to the website Federal Register for Articles in 2013 #14400 (notice-of-funds-availability-for-the-section-533-housing-preservation-grants-for-fiscal-year-2013) for more information. The RHS also administers the 509(f)(6) Housing Packaging Grants program to assist organizations to help “RHS make loans and grants in 523 counties and colonias in 26 states, Puerto Rico, the U.S. Virgin Islands, and Western Pacific Territories.” see Rural for Information, publications, sheets 27-rd-programs 109-housing-application-packaging-grants-section-509f6. “Designated counties have a minimum of 10 percent occupied substandard housing and a 20 percent poverty rate. Colonias are “identifiable communities” in Arizona, California, New Mexico and Texas that are within 150 miles of the U.S. Mexico border and that lack decent water and sewage systems and decent housing.”

Other housing programs include, but are not limited to:

Housing Choice Vouchers- Largely dedicated to assisting families to rent adequate living accommodations, the program can, under specific conditions, help a family purchase a modest home. See HUD website for program offices public and Indian Housing Programs fact sheet.

Bridge of Hope- This effort serves single homeless mothers to assist them to obtain permanent housing and employment. Bridge of Hope programs are conducted on a county basis in partnership with local faith based organizations and others who are interested in ending homelessness among single mothers and their children. During the 2 year program, while gaining workplace skills and attending school the families receive rental assistance, help for their case, and make lasting friendships. For program examples see and