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Home loan rates through USDA-RD lowered to 4.5%

By Staff | Aug 20, 2010

DES MOINES – If you are looking to purchase a home this year now is a great time to take advantage of low mortgage rates offered through U.S. Department of Agriculture Rural Development.

Rates for the agency’s direct home loan program dropped to 4.5 percent for a 33-year fixed-rate loan effective Aug. 1, 2010.

USDA-RD offers the only no-down-payment programs for qualifying residents purchasing a home in communities of 20,000 or fewer residents.

“We have an abundance of funding available for rural Iowans to use right now thanks to the American Recovery and Reinvestment Act,” said Bill Menner, USDA-RD state director in Iowa.

“Since being signed into law 18 months ago our agency has helped 1,095 rural homeowners in Iowa tap nearly $100 million in direct and guaranteed loans from the recovery act to assist them with their home purchases.”

USDA-RD has two low-interest, no-down-payment loan programs to help eligible families living in rural communities and areas purchase new homes.

Loans and some grants are also available to help families make needed repairs to their homes as well.

In most cases, a family of four with an adjusted annual income of up to $49,000 may qualify for a direct loan from the agency with an interest rate of 4.5 percent interest rate.

Under this program, an applicant may be eligible for payment assistance, which would subsidize the interest portion of the house payment down to as low as 1 percent, lowering the overall monthly payment.

If a family of four’s adjusted annual income is less than $73,500 they may qualify for the agency’s guaranteed home loan program. The interest rate for this program is negotiated between the applicant and the lender.

The guarantee loan program is administered by a local lender who takes the application, processes it and determines the acceptability of the home to be financed.

Income limits for both programs increase in communities located near metro areas. Also, homes can be existing or new construction.

Existing homes must be structurally sound and the property cannot have any income-producing outbuildings.

“Along with home mortgage loans, funds are available from USDA-RD to assist with improvements to community facility and infrastructure projects such health clinics, community centers, public safety buildings and water and wastewater systems, as well as businesses and economic organizations looking to create jobs in rural communities,” Menner said.

Additional information on programs is available through USDA Rural Development by calling (515) 284-4663 or by visiting the agency’s web site at: www.rurdev.usda.gov/ia.

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