USDA Loan Programs Help Rural Families Afford To Buy A Home

By Jackson Griffin

More and more rural Michigan-ers are using government programs to buy a home, according to the U.S. Department of Agriculture.

One of those is a direct loan program from the USDA’s Rural Development Agency, said an article on mlive.com. Loan guarantees are another. The USDA will agree pay back part of a private lender loan if the borrower defaults. Some of these loans have subsidized interest rates and others are at the current market rate.

Nearly 7,000 families in Michigan used the programs in 2010 and 2009, a higher number than years previous, said Michigan Rural Development Agency spokesman Alec Lloyd.

“People are becoming more aware of what we have to offer,” he said.

Residents of Oceana, Newaygo and Mason counties are included as those eligible to participate in the USDA programs.

Muskegon County citizens living north of Giles Road are eligible, along with individuals and families east of Hilton Park Road. Those who live in the area east of Dangl Road, south of Heights-Ravenna Road and north of I-96 are included as well.

In Ottawa County has different eligibility standards. Those in areas from Ferris Street to the Muskegon County line and 14th Avenue to Lake Michigan are not eligible. Areas around Holland, Zeeland, Hudsonville and Jenison are also ineligible.

For a complete map, visit www.rurdev.usda.gov/mi/maps/mapsmain.htm.

Both programs have an income ceiling and floor and require a good credit rating, Lloyd said. The Rural Development Agency is offering classes detailing the expenses involved, he said.

“We want them to succeed in home ownership,” he said. “The goal is to help people who have the means to buy a home to get there.”

Government backing of the programs has allowed borrowers to make a lower down payments to their lenders. There could even be cases where money would be saved with mortgage payments being lower than rent payments, Lloyd said. This should enable some who were unable to gather the funds for a down payment to purchase a home.

Lloyd went on to say that the programs have lower default rates than most commercial lenders. Helping this is that rural home prices tend to be fairly stable and families tend to stick around.

“Just because you have a guarantee on your loan doesn’t mean you can walk away from it,” he said. “People who live in rural areas tend to want to stay there.”

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