What is a Rural Housing Loan?

What is a Rural Housing Loan?
by Jerome Foster - June 12, 2021

Do you want to know what is a rural housing loan? Let’s start!

Rural housing loans offer loans to build, buy or improve a permanent resident in a rural area.

Direct and guaranteed loans may be used to buy, build, or improve the applicant's permanent residence. New manufactured homes may be financed when they are on a permanent site, purchased from an approved dealer or contractor, and meet certain other requirements. Under very limited circumstances dwellings can even re-financed with direct loans if you have a good credit history! The value of your home must stay within limits however as it is important that houses remain modest in order for them to continue looking decent while remaining safe.

Who is eligible for Rural Housing Loans?

In order to qualify for this benefit program, your property must be located in an eligible rural area. Applicants must have very low-, low- or moderate incomes that fall below a certain threshold based on the median income of their local region (very low is defined as below 50% AMI; Low-income falls between 50%-80%; Moderate Income ranges from 115%). Families without adequate housing and able to afford payments will also need to meet other requirements before they can apply.

 Qualifying repayment ratios are 29% for PITI to 41% for total debt. In addition, applicants must be unable to obtain credit elsewhere and have an acceptable credit history. You must be a US citizen or permanent resident!

What are the loan terms for Rural Housing Loans?

Direct loans are repaid over 33 years or 38 years, depending on your adjusted annual income. Payment assistance is granted to borrowers at a rate of one percent if they have an adjusted family income that does not exceed 60% of the area median income. But when you live in public housing and leave there for some reason, the government will reclaim their payment assistance from you!

 There are no deferred mortgage loans available to purchase a home and the interest rates for guaranteed mortgages are up to the lender. There's also no required down payment, but lenders use various ratios when determining repayment feasibility.


  • Jerome has worked for an international real estate magazine in the past before joining Prudentialcal. He now spearheads our team of writers and ensures the quality of content we produce weekly.

A Quick Guide to Buying Land
A Quick Guide to Buying Land
Do you want the serenity of country acres, a piece of land to park your small house, or a buildable ...
Purchasing a Home: How Much Can You Afford and What Will It Get You?
Purchasing a Home: How Much Can You Afford and What Will It Get You?
When purchasing a home, the figures might get so large that they lose their significance. You may choose $2.25 brand-name ...
Everything You Need to Know About Timeshare Is It Worth it
Everything You Need to Know About Timeshare: Is It Worth it?
Photo by Michelle_Maria on Pixabay A timeshare is a type of vacation ownership in which a group of people share ...
How to Get the Most Out of Your Home Insurance Policy
How to Get the Most Out of Your Home Insurance Policy
Your home is likely your most valuable asset, so it's important to protect it with a comprehensive home insurance policy. ...
How Long Does it Take to Buy a House
How Long Does it Take to Buy a House?
It takes an average of 4-12 months to browse for a home, plus an additional 30-45 days to close once ...
1 2 3 52
Prudential Cal strives to provide the most detailed information about the real estate industry. We assist people in making the best decisions possible by offering unique insights into the global real estate market and advice for both homebuyers and sellers.
Additional Information
Copyright © 2022 Prudential Cal. All Rights Reserved.
DMCA.com Protection Status
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram