Houses are a lot like cars in that if you don’t keep up on repairs, pretty soon they start to coalesce into one big, expensive pain in the neck. When the needed repairs are of a health or safety nature, the need for speed in fixing them can be overwhelming. While leaky roofs, bad wiring and rotted pipes can’t be ignored, fixing them is impossible for those without the financial means to do so.
The U.S. Department of Agriculture has programs to help low- to moderate-income homeowners in these situations: Rural Repair and Rehabilitation Loans and Grants. The programs are dedicated to assisting these homeowners with repairing, improving and updating their homes as well as removing health and safety hazards.
The Home’s Eligibility
Say the word “rural” to most people and they picture any area located outside of a city. The USDA has a unique definition of rural, however, when it comes to a home’s eligibility for a rural development loan or grant. This definition includes open spaces that are “not part of or associated with an urban area,” according to the USDA. But, the definition does not preclude small towns or villages. If these areas have a population fewer than 10,000, they may qualify. Areas with a population to 20,000 may qualify if there is a history of a serious lack of mortgage lending to low-income families in the area.
The Applicant’s Eligibility
The USDA uses the Department of Housing and Urban Development’s (HUD) formulation of an area’s median income (AMI) to determine income limits for its programs. Each region’s AMI is adjusted annually. To qualify for either a grant or a loan, applicants must have income below 50 percent of the area median income and be U.S. citizens or permanent residents. Grants are restricted to those aged 62 or older who lack the ability to pay back a rural development repair and rehabilitation loan. Applicants to either program must occupy the home.
The funds that the applicant receives from the rural development grant program can only be used to pay for work performed to remedy health and safety hazards and improve accessibility. Some of the most common repair jobs include improvements to the home’s insulation, roof repair, new heating or cooling systems, adding ramps, widening doorways and repairing water and sewer connections. The maximum grant amount is $7,500.
Recipients aren’t required to pay back the grant money unless the home is sold within three years of receipt of the grant. In that case, the recipient is required to reimburse the USDA from the proceeds of the sale.
Loans are available up to $20,000 at 1 percent interest for 20 years. They may be used to improve, update and repair the home as well as to remove safety and health hazards.
The rural development program has certain guidelines for the repairs done with the grant money. If the repairs include anything having to do with waste and water systems, they must meet the area’s health department standards. While USDA loans used to purchase a home mandate that the house must meet the state’s building code and the Housing and Community Facilities Program (HCFP) thermal and site standards, repaired properties – either with the use of a grant or a loan – aren’t held to these guidelines.
To learn more about either program, contact a USDA Service Center in your area.