• Oct 30, 2016 Rural lending’s best-kept secret
    Gary Sandler
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    Published  October 30, 2016

    The U.S Department of Agriculture makes home loans. More importantly, it makes zero-down home loans. It also provides loan guarantees to traditional lenders who make home loans in underserved rural areas. Another well-kept secret is that the USDA Rural Housing program has been in existence since 1949. According to Terry Brunner, USDA’s State Director in New Mexico, its mission is “To increase economic opportunity and improve the quality of life for all rural Americans”.

    The program is designed to make homeownership available to low and very low income applicants in rural areas with populations of 35,000, or less. With the exception of Las Cruces proper and some areas of Sunland Park and Chaparral, most residential properties located in the remainder of Dona Ana County meet the program guidelines. Direct loans made by USDA itself are amortized over 33-years, while loans made by traditional lenders and guaranteed by USDA have a 30-year payback schedule. Very low income borrowers may be eligible for 38-year payback terms. In addition, USDA also makes loans and grants to rehabilitate properties that are already owned by eligible borrowers.

    Direct Loan Program. Direct loans are capped at $168,200 in Dona Ana County. Homes generally have to contain 2,000 square feet of living space, or less, and cannot have an in-ground swimming pool. Borrowers must occupy the home as their primary residence.

    Guaranteed Loan Program. Guaranteed loans are those made by traditional lenders, with a guarantee to the lender that USDA will make sure the lender’s interest is protected in the event the borrower defaults on the loan. There is no maximum loan amount in Dona Ana County but borrowers may only obtain loans they are able to afford. Home-size and occupancy requirements mirror those of the Direct Loan Program.

    Repair and Rehabilitation Program. Very low income homeowners who live in rural areas may be eligible to borrow up to $20,000 to repair or rehab their properties. Borrowers who are 62-years of age, or older, and who cannot afford to make payments may be eligible for grants that do not have to be repaid.

    During the 2016 fiscal year, USDA made 325 direct and guaranteed home loans in New Mexico, and was ranked 22nd in the nation for loan production. The total dollar volume was just over $46.8 million in home loans and just over $483,000 in loans and grants for rehabilitation. The Las Cruces office made 74 direct and guaranteed home loans totaling just over $9.6 million, while an additional $273,827 in loans and grants were used to fund twelve homeowner rehabilitation projects.

    USDA loans are easier to qualify for than traditional Conventional, FHA or VA mortgages, but keep in mind that they are designed to assist low and very-low income borrowers. Determining both property and borrower eligibility is as easy as logging on to USDA’s eligibility portal at http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do. Interested candidates can also visit USDA’s Las Cruces office located at 760 Stern Drive, Suite 139, or call them at (575) 522-8775, extension 4.

    Let’s hope that yours is the next household to benefit from one of these terrific programs.

    See you at closing.

    Gary Sandler is a full-time Realtor and president of Gary Sandler Inc., Realtors in Las Cruces. He can be reached at (575) 642-2292 or Gary@GarySandler.com.

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      Gary Sandler