The U.S. Department of Agriculture Rural Development has announced a decrease in the home mortgage interest rate for its Direct Homeownership Loan program. Effective September 1, 2016, the interest rate will be reduced to 2.875% percent for home mortgages. This is the lowest interest rate ever offered by the Agency. Homeownership opportunities are available under this program with no down payment, and provide for long term, fixed interest rate financing.
The low interest rate may make it a good time for eligible families to purchase a home through the USDA Rural Development direct loan program. Depending on household incomes, mortgage payments may be further subsidized to as low as one percent interest rate. The lower rates make the monthly payments affordable, and often may be less than rent. For example, a $100,000 loan at 2.875% would have monthly principal and interest payments of $391. If applicants qualify for full subsidy at one percent interest, the monthly payments would be further reduced down to $297. The cost of taxes and insurance would need to be added to the monthly payment.
The Direct Homeownership Loan program is available to households with incomes at 80 percent or less of the county median income, for the purchase of an existing home or new construction in rural areas. For many counties in Nebraska, the income limit for one-four person households is $48,800 and $64,400 for five-eight person households. However, some counties may have higher income limits up to $62,800 for one-four persons and $82,900 for five-eight person households. All communities in Nebraska are eligible for housing programs with the exceptions of Fremont, Grand Island, Hastings, Kearney, Lincoln, North Platte, Omaha and South Sioux City/Dakota City. To determine the rural eligibility requirements and/or area income limits in your county visit http://eligibility.sc.egov.usda.gov.
Applicants must have acceptable credit history and repayment ability. Credit scores of 640 or greater are typically considered as acceptable however, credit scores below 640 may also be considered if there are mitigating circumstances.
For additional information please contact the USDA Rural Development office in Nebraska nearest you or visit www.rd.usda.gov/ne and click on Single Family Housing Direct Home Loans under Key Programs.