USDA Proposes Changes to Ease Rural Loan Eligibility Requirements
More households are expected to get Rural Housing Service (RHS) loans under a proposed rule released on August 31, 2018. The U.S. Department of Agriculture proposes changes to its single-family direct and guaranteed loan and grant programs that includes a two-tier system for determining eligibility. The rule also proposes revisions to how it calculates household net assets and loan limits.
The proposed changes are:
- Revising the definition of very low-, low-, and moderate-income to allow for a two-tier income limit structure (also known as income banding) within the single-family housing direct loan and grant programs.
- Clarifying that net family assets are not considered when calculating repayment income, and that net family assets exclude amounts in voluntary retirement accounts, tax advantaged college, health, or medical savings or spending accounts, and other amounts deemed by the Agency not to constitute net family assets.
- Revising the methodology used to determine the area loan limits to use a percentage(s), as determined by the Agency, of the applicable local HUD section 203(b) limit.
- As a result of income banding, converting borrowers currently receiving payment assistance method 1 to payment assistance method 2 should they receive a subsequent loan.
- Revising the definition of low-income to allow for the two-tier income limit structure (income banding) within the single-family housing guaranteed loan program.
RHS will accept comments on the proposed rule until October 30, 2018. Click here to view the RHS Proposed Rule Changes.
Courtesy: National Association of REALTORS®