When I started writing these monthly columns in the autumn of 2013, my aim was to give Reformer readers a heads-up on the wide variety of housing options locally. When I first got interested in the dilemmas around finding decent housing at a normal wage level, I, myself, knew nothing about all these options; 14 years later I realized that I have picked up a lot of useful information along the way and wanted to share it and "get it out there." (My inner Social Worker never sleeps!)
Similar in certain ways to the requirements of Habitat for Humanity, USDA Rural Development funding is aimed at the want-to-be-homeowner, where that dream is just out of reach. Given the rental costs in this part of the world, the high cost of real estate, and the low wages, it is very hard to put together enough money for a conventional down payment on a house of ones’ own here. Even if you luck out and win $30,000 in the Powerball Lottery, and apply it to a downpayment, very likely a regular bank will not approve your loan application because their current rate of interest charges will be more than you can sustain over time.
USDA Rural Development is a Federal program. We are a rural part of the world. Places like Burlington, Winooski and parts of Colchester cannot access this program. It is our government’s attempt to even the playing field for rural folks. I could not move to Vermont years ago even though I wanted to.
With No. 1, the subsidized mortgage product, you apply directly to USDA Rural Development for financing. The loan is written at a fixed rate, but subsidized down to as low as 1 percent(depending on family income). This subsidy is reviewed annually and mortgage payments are adjusted accordingly. If the borrower should want to sell, refinance with another lender, or at the end of the 33-year term, a portion of the subsidy has to be paid back.
The No. 2. type of mortgage financing is offered by USDA Rural Development’s guaranteed mortgage program. With this program, you apply to a participating lender (a bank) to obtain financing, and USDA Rural Development provides the private mortgage insurance. The premium for this private mortgage insurance is paid in one lump sum at the loan closing, versus you paying it every month. This, thereby, increases the amount of mortgage money for which you can qualify. Fundamentally, this is a loan backed up by the oomph of the Federal Government. With either of these two options there is no down payment required, which, of course, would have been a big stumbling block for many folks.
There are, of course, many eligibility requirements. Don’t zone out, here ... this is the price you have to pay for living in your own home. You have to dig in and deal with all the mumbo jumbo. Those whose minds have just gone blank are doomed to rent forever!
I’ve read and reread the eligibility requirements and the requirements for site and house, etc. Basically, with, of course, some exceptions, if you are a U.S. Citizen and a full time resident, will actually be living in the house yourself (not renting it to others as a business), have a dependable income in the low or very low income level, and want to buy, build or repair a modest house, it is really worth your while to apply. Camps, mobile homes and multifamily or income producing properties do not qualify. That leaves an awful lot of folks who would qualify. We all know plenty of people who would likely fit the criteria. Interestingly, I have come to learn through Habitat that the very people who would most fit the eligibility requirements do not see it themselves. It takes a coworker, a friend or relative to say, "I think that might work for you. Why don’t you give it a try?"
I am deliberately not citing hard numbers here for two reasons: I have been horrible at math my whole life and just the sight of numbers makes my mind go numb, and I’ll bet there are plenty of others reading this who are as easily defeated by numbers as I am. But the loan officers at USDA Rural Development are a whiz at that stuff. Our local USDA Rural Development Loan Officer, Deborah Boyd has been volunteering for 13 years at West River Habitat for Humanity vetting our mortgage applications. She seems to be able to do it with no sweat whatsoever and is a real peach, believe me. [*See below if you are comfortable with figures and love numbers.]
So, what do you have to lose? See if you might be able to purchase and renovate an existing single family house that others have passed on, or purchase a building site and construct a modest single family home. You can also get a USDA Rural Development loan to repair a qualifying home or to refinance real estate debts when circumstances beyond your control show that you cannot continue to make full bank payments. I am just citing a few of a long list of ways USDA Rural Development loans might be just the thing for your situation.
Contact Deborah Boyd at our local USDA Rural Development office at 28 Vernon Street, Suite 333, Brattleboro. Phone 802 257 7878 x 102. If you prefer to get your info on line use www.rurdev.usda.gove/nh-vtHome.html.
* There is a different income limit for each type of USDA Rural Development program. For No. 1. the direct, subsidized mortgage program, the maximum income for a 4 person household in Windham County is currently $51,300; for No. 2 the guaranteed housing program, it is $76,500. In order to calculate income eligibility, all household incomes must be included. From that number, a $480 deduction is given for each child. Childcare expenses for any child under 12 are also deducted. If one of the applicants is 62 years of age or older, a $400 household deduction is also allowed.
Claudette Hollenbeck is a retired Social Worker, living in Wilmington and a Board Member of Windham & Windsor Housing Trust and a past member and President of West River Habitat for Humanity.