QandAs: Loans

What is an RHS Home Loan?

Answer:
Rural Housing Service Loans, or RHS Loans, help

low to moderate-income rural residents qualify for a home loan. Created in 1994, the sole purpose of the program is to endorse community and housing development in rural neighborhoods throughout America.

This type of loan is perfect for homebuyers with little or no money for down payment or closing costs. Qualifying borrowers receive a direct loan for the United States Department of Agriculture, or a privately funded institution loan, wherein the Department insures the loan. To ensure that borrowers obtain safe and sanitary housing, all properties must meet government development standards.

While RHS Loans help individuals with low to moderate-incomes find respectable and affordable homes, each loan applicant must meet certain mortgage loan requirements. Prior to receiving a loan approval, the lender must confirm that the borrower is able to meet the expense of a monthly payment, plus insurances and taxes. Likewise, borrowers must lack adequate accommodations, or be unable to attain credit. All the same, a satisfactory credit history is required. To keep monthly payments low and affordable, RHS offers 33-year mortgages, rather than the traditional 30-year mortgage. Borrowers with very low incomes can get approved for a 38-year mortgage loan.