The U.S. is a rich country whose citizens are blessed to live in an area of the world where extreme poverty is relatively rare. Even so, over 38 million people live below the poverty threshold, as defined by the U.S. government.
To help make sure that everyone has a place to live, the government offers home loans to low to moderate-income households.
Very Low to Moderate-Income Housing Loans
Some people straight up can't afford a decent place to live. They may live in an old home that needs repairs they can't afford. Perhaps they live without running water or electricity, or even on the street.
The goal of this loan program is to help very-low, low, and moderate-income households find adequate housing in rural areas. The definition of adequate housing is modest, safe, and sanitary.
Who Is Eligible?
To qualify, applicants must earn very low to moderate incomes. There is no set number that defines this as the cost of living varies from city to city. Instead, income limits are quantified as a percentage of the area median income (AMI).
- Very low = 50% or less of the AMI
- Low = 50% to 85% of the AMI
- Moderate = 115% of less than the AMI
Applicants must live in inadequate housing, yet be able to make high enough monthly payments to cover the PITI (Principal, Interest, Taxes, and Insurance). For a qualifying ratio, PITI payments must add up to 29% or less of the total household income. The total debt ratio is limited to 41%.
In essence, applicants wishing to qualify must walk the fine line between being unable to get credit elsewhere yet still have a decent credit history. Be prepared with documentation showing you were turned down for a loan elsewhere as the lender may ask for this.
Qualifying properties are restricted to specific rural areas.
How Can You Use the Money?
Low to moderate-income housing loans can be used in a number of ways. You can use the funds to buy or build a qualifying home, or you can use them to fix up the home you currently occupy. In rare circumstances, you can use them to refinance your current mortgage.
The home must meet standards of modesty, sanitation, decency, and safety. Manufactured homes are eligible, though they must be on a permanent site.
Payment assistance on the loan is also offered, effectively reducing the interest rate to as low as 1%. Keep in mind this assistance may be recaptured by the government when you move out of the home.
Make Your Dreams Come True
While most Americans are dreaming of backyard pools or newer cars, others dream of something as simple as a decent place to live. If that's you, stop dreaming and make it happen.
These low to moderate-incomes housing loans can help you put a decent roof over your family's head. You'll get a better night's sleep knowing that your family is safe. With that more relaxing sleep, you can start dreaming of something more fun than simply a safe place to live.
Are you looking for more assistance? Don't hesitate to check out our post on government grants.