What is the Single Family Housing Guaranteed Loan Program ?
The Single Family Housing Guaranteed Loan Program (SFHGLP) is a government initiative in the United States aimed at facilitating homeownership in rural areas. Administered by the U.S. Department of Agriculture (USDA), this program provides eligible low- and moderate-income families with the opportunity to secure a home loan through approved lenders with a government guarantee. The primary objective of the SFHGLP is to enhance access to affordable housing in rural communities where conventional financing options may be limited.
One of the key features of the program is the government-backed guarantee, which encourages lenders to offer more favorable terms and conditions to borrowers who might not otherwise qualify for conventional mortgages. This support helps mitigate the financial risk for lenders, making them more willing to extend loans to individuals and families in rural areas. The SFHGLP is designed to improve the overall economic well-being of these communities by promoting stable homeownership.
How do USDA Guaranteed Loans Work ?
In qualifying rural areas, the Section 502 Guaranteed Loan Program assists approved lenders give low- and moderate-income people the chance to purchase a suitable, modest, decent, safe, and hygienic primary residence. 100% financing is available to qualified applicants for the purchase, construction, rehabilitation, improvement, or relocation of a home in a rural area. For individuals who qualify, the program offers no money down loans with a 90% loan note guarantee to qualified lenders, lowering the risk of offering 100% loans to suitable rural homebuyers.
The program typically targets areas with lower population densities, reflecting its focus on rural development. While the USDA does not directly issue loans, it plays a pivotal role in fostering partnerships between lenders and prospective homeowners, thus contributing to the growth and sustainability of rural housing markets.
Who is Eligible for Single Family Housing Guaranteed Loan Program ?
USDA guaranteed loan eligibility is determined by several factors, and applicants must meet specific criteria set by the U.S. Department of Agriculture. Here are some key eligibility requirements:
1) Income Limits:
Applicants must meet income limits established by the USDA for the geographic area in which they intend to purchase a home. These limits are based on the median income for the area and the number of people in the household. (cannot exceed 115% of median household income)
2) Citizenship and Legal Residency:
Borrowers must be U.S. citizens, U.S. non-citizen nationals, or qualified aliens legally residing in the United States.
3) Occupancy:
The home financed through the SFHGLP must be the borrower's primary residence. The program is not intended for investment properties or second homes.
4) Property Eligibility:
The property being financed must be located in an eligible rural area as defined by the USDA. The USDA provides an online mapping tool to determine whether a specific address is in an eligible location.
How to Apply for Single Family Housing Guaranteed Loan Program ?
Applicants can apply for a Guaranteed Loan (Section 502) through USDA Rural Development’s network of approved lenders. You can also get in contact with these approved lenders with any queries or situations you would like looked through for potential eligibility. This list of active lenders is searchable by state.
To apply for the USDA Guaranteed Loan Program, follow these general steps:
1) Find an Approved Lender:
Locate a lender participating in the Single Family Housing Guaranteed Loan Program (SFHGLP) by checking the USDA's approved lenders list.
2) Complete Loan Application:
Work with the lender to fill out the loan application, providing necessary documentation like proof of income, employment verification, and financial details.
3) Property Eligibility Check:
Confirm the property's eligibility using the USDA's online mapping tool or seeking assistance from your lender.
4) Underwriting Process:
There are no credit score criteria for the program, candidates must show that they are ready and able to manage their debt.
5) Interest Rate and Loan Term:
Interest rates differ and are set by individual lender. Only 30-year fixed-rate USDA Section 502 Guaranteed Loans are available.
6) Submit to USDA:
After lender approval, submit the loan to the USDA for a guarantee, and wait for a conditional commitment.
7) Loan Closing:
Attend the closing where you sign documents, and the lender disburses the loan funds.
It is important to note that USDA Rural Development does not recommend any particular lenders in the private sector. Your chosen approved lender will manage the complete loan application procedure, collaborating with Rural Development personnel to guarantee your loan through the organisation.
What can the Loan Funds be used for ?
Funds from the USDA Section 502 Guaranteed Loan may be use for:
- To be utilized as a permanent residence, residential property, either new or old. Structures can be manufactured, modular, attached, detached, or part of a PUD. (It cannot be a income-producing property). The transaction may include reasonable/customary charges related to the purchase as well as closing costs.
- A location where a house is either new or old. No restrictions on acres.
- Repairs and rehabilitation when coupled with the purchase of an existing dwelling.
- Refinancing of qualifying loans - for existing USDA borrowers only.
- Essential home appliances including wall-to-wall carpets, stoves, ovens, refrigerators, washers, dryers, and air conditioning and heating units, provided they are transported with the house.
- Expenses associated with site preparation, such as grading, plantings for the foundation, sod or seeding, trees, pathways, fences, and roadways
How to Contact SFHGLP Team ?
You can contact to the U.S. Department of Agriculture through the following methods:
- Contact the Loan Policy team at sfhgld.program@usda.gov or *833-314-0168, ext. 4, if you have any general policy question.
- If you have a queries on a particular application submitted to USDA, send an email with file-specific inquiries to the production team in charge of the state at SFHGLPTWO@usda.gov. You may also call at *833-314-0168, ext. 2 for support.
- Full Contact Sheet
FAQ's
How can I find an approved lender for the SFHGLP?
You can find a list of approved lenders on the USDA's website or by contacting your local USDA office.
Can I use the SFHGLP for any home purchase?
The program is designed for primary residences in eligible rural areas. It is not intended for investment properties or second homes.
How do I check if a property is in an eligible rural area?
Use the USDA's online mapping tool or consult with your lender to confirm the eligibility of the property.
How does the USDA guarantee work?
The USDA provides a guarantee to approved lenders, acting as a backup in case of borrower default, which encourages lenders to offer loans with potentially more favorable terms.
What is the difference between USDA guaranteed and direct loan?
The main difference between USDA Guaranteed and Direct Loans lies in the way the loans are funded. USDA Guaranteed Loans are provided by approved lenders with a government guarantee, while USDA Direct Loans are directly funded by the USDA and are targeted at low- and very-low-income borrowers who may have difficulty obtaining financing from other sources.
Are USDA loans guaranteed by the federal government?
Yes, USDA loans are guaranteed by the federal government through the U.S. Department of Agriculture's Single Family Housing Guaranteed Loan Program (SFHGLP).