Called The Very Low Income Housing Loans Program and referred to as Program #10.410 in the Catalog of Federal Domestic Assistance, this program helps very low, low-income, and moderate-income households to obtain modest, decent, safe, and sanitary housing for use as a permanent residence in rural areas. Direct and guaranteed loans may be used to buy, build, or improve the applicant’s permanent residence. New manufactured homes may be financed when they are on a permanent site, purchased from an approved dealer or contractor, and meet certain other requirements. Under very limited circumstances, homes may be re-financed with direct loans. Dwellings financed must be modest, decent, safe, and sanitary. The value of a home financed with a direct loan may not exceed the area limit. Direct loans are made at the interest rate specified in RD Instruction 440.1, Exhibit B (available in any Rural Development local office), and are repaid over 33 years or 38 years for applicants whose adjusted annual income does not exceed 60 percent of the area median income, if necessary to show repayment ability. Payment assistance is granted on direct loans to reduce the installment to an effective interest rate as low as one percent, depending on adjusted family income. Payment assistance is subject to recapture by the government when the customer no longer resides in the dwelling. There is no funding provided for deferred mortgage authority or loans for deferred mortgage assumptions. Guaranteed loans may be made to refinance either existing RHS Guaranteed Housing loans or RHS Section 502 Direct Housing loans. Guaranteed loans are amortized over 30 years. The interest rate is negotiated with the lender. Contact your local office of the U.S. Department of Agriculture Rural Housing Service.

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