A new guaranteed loan program to help low- and moderate-income families buy homes in rural areas has been put into effect by the Farmers Home Administration.
FmHA Administrator LaVerne Ausman said the pilot program will guarantee up to $100 million in housing loans in 20 states. Congress created the program in the Fair Housing Act of 1990.The Agriculture Department agency will guarantee loans made by eligible commercial lenders in rural areas. The $100 million is for the current fiscal year, which runs through Sept. 30.
States in which the agency's pilot program will operate are:Arizona, Arkansas, California, Colorado, Georgia, Iowa, Kentucky, Louisiana, Maine, Michigan, Mississippi, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and Washington.
The agency said loan operations have already begun in three of the states - Georgia, Iowa and South Carolina.
"This housing loan guarantee program gives FmHA another method of providing housing credit to low- and moderate-income rural residents," Ausman said in a statement.
The FmHA program is similar to the one operated by the Department of Veterans Affairs, he said.
Low income can range from $18,500 to $36,000 per year for a household of three or four, depending on the area of the country, the agency said. Moderate income can be $23,000 to $45,000 per year.
Applicants must not be able to get home financing without the FmHA guarantee.
The program includes an interest subsidy provision for low-income borrowers. Under it, the interest rate is reduced for the borrower, based on income and the median income in the area.
The FmHA will pay the difference between the interest paid by the low-income borrower and the rate charged by the lender.