As a general rule, just about all USDA housing loans have been particularly
designed for the varying income levels of the residents who inhabit these houses. This is why the term ‘multi-family housing loan’ is also used to describe them. Here it is pertinent to point out an important criterion that separates this loan from other loans; the income has to be determined based on an already pre-specified cap.
This program works with certain pre-qualified lenders who have been culled from the private sector. The lenders compete with each other, in a bid to provide the required amount of financing to the already vetted borrowers. Here, the core purpose is to increase the supply of highly affordable housing units for both low as well as moderate income earning individuals and their families in eligible rural towns and areas of the nation. It is pertinent to note that this eligibility would be determined by the United States Department of Agriculture, rather than the prospective borrowers or lenders themselves.
• Meeting the Standard Application Criteria for This Program
Both private lenders and also individuals who desire availing this loan facility are deemed eligible to apply for the same, subject to meeting certain stringent requirement criteria that are as follows:
• Eligibility Criteria for Lenders and Lending Agencies (for Active Lenders)
Eligible lenders are automatically considered to be so, if they have been properly vetted and approved and are deemed active in any one of the following programs:
o Freddie Mac
o Fannie Mae
o State or local housing finance agencies
o Gennie Mae
o Federal Home Loan Bank (FHLB) members
• Eligible Borrowers’ Criteria
o Federally recognized indigenous tribes (especially native American tribes)
o NPOs or not-for-profit organizations
o Most local and state governmental entities
o For-profit organizations (this includes LLCs as well)
• Additional Important Requirements for Aspiring Applicants
o The rent for individual units is usually capped at around 30 percent of 115 percent of the area’s total median income
o The average rent for any particular project as a whole, fully inclusive of all tenant paid utilities, should not be in excess of 30 percent of 100 percent of the area’s total medium income
o All the residential complexes in an area should also consist of at least a bare minimum of five units each
o All the residential complexes and apartments of the project should only contain those units that are full detached, semi-detached, multi-family structures or even row houses.
The concept of USDA home loans is a great boon for many people who are in urgent need of housing but are not able to afford it. It is a great effort by the government that has been of great help to many people.