Let's Build A Home with the USDA Loan Program!
In the 19th century, people in a rural community gathered to help each other build barns. They were necessary structures not only for the individual families, but for the communities. This kind of group effort helped solidify the members of the community and offered a way to ease the burden placed on a family of constructing such large structures.
Today, this type of community construction still exists. And with the help of the U.S. Dept. of Agriculture (USDA), a family can have the help of the government, as well as the community, to construct a modest home.
What is the USDA Mutual Self-Helping Loan Program?
The USDA Mutual Self-Help Housing Loan program was developed to aid low and very-low income families in constructing their own home in rural communities. This program is aimed at families who do not have the means to purchase safe, clean housing through conventional methods.
Homes constructed through the Self-Help Housing program must be modest in size, design, and cost. By definition, the housing must cost less than the current HUD dollar cap. Applicants should check with their mortgage broker when applying for a USDA Self-Help Housing loan for the cost limits.
That also means that a family of four may not design and construct a 7-bedroom, 4-bathroom luxury estate on the rolling hills of the prairie. The home must be designed to meet the needs of a family without excess, and be of a reasonable construction material. The final product must meet the voluntary national model building code adopted by the state.
The intent of the Self-Help Housing program is to enlist the help of community members in constructing a new home for the qualified family. The home must be build under suitable supervision and with the help of volunteers from the community, who will perform approximately 65% of the housing construction labor. The cost savings in labor helps families who do not otherwise qualify for standard housing construction loans to build and own their own home.
Who Qualifies?
To qualify for a USDA Self-Help Housing loan, a family must have low or very low incomes. Very low income is defined as earnings below 50% of the median in an area. Low income limits are 50-80% of an area median income. Qualified families must be able to meet monthly mortgage payments to include principal, interest, taxes, and hazard insurance.
Adequate credit histories must also be provided. Although the loan program is geared for families who cannot obtain credit elsewhere for a housing loan, a credit history with a reasonable history of meeting on-time payment obligations will be noted.
Loan Terms
The USDA Self-Help Housing loan program offers favorable interest rates. Those who qualify for the program home loan can choose a loan term up to 33 years to help reduce the monthly mortgage payment. Also, families who have incomes less than 60% of the area median income may have the option of a 38-year loan term, thus reducing monthly payments even more. However, applicants should consider the additional cost in interest over the extended loan term periods.
No down payment is required for families who qualify for the USDA Self-Help Housing loan.
A home is the central focal point of families to enjoy laughter, quiet moments, and simply a place to call their own. The dream of home ownership should be available to everyone, even those who can't afford a conventional loan for new home construction or housing priced out of their budget. With the help of the USDA Mutual Self-Help Housing loan program, the dream of home ownership in a small community can be achieved.
