Funding Provided: $10,472,000,000 (Nationally)
Overview: The Recovery Act investments in the 502 guaranteed loan program will provide assistance to those impacted by the recession, preserve jobs and promote economic recovery. Banks and other financial institutions are reluctant to lend money in the current economic environment, a reluctance that is lessened when the loan has a guarantee backed by the full faith and credit of the Federal Government. The lack of available credit to purchase a home, combined with the number of foreclosures in the market, is negatively impacting the housing industry as well as other sectors of the economy. Recovery Act 502 Guaranteed loan funds will encourage private sector lenders to make affordable home loans in rural America. There are over 3,000 private sector lenders participating in the section 502 guaranteed loan program.
Section 502 guaranteed loans are authorized by title V of the Housing Act of 1949. 7 CFR Part 1980-D provides the policies for the guaranteed single family housing loan program. The section 502 guaranteed loan program helps low- and moderate-income applicants to purchase a modest dwelling located in a rural area. Low-income is defined as between 50 and 80 percent of the area median income (AMI) and moderate-income is between 80 and 115 percent of AMI. Applicants may obtain 100% financing and must demonstrate the ability to afford the mortgage payments, including taxes and insurance, which are typically within 29 percent of an applicant's income. For additional information about the single family housing section 502 guaranteed loan program, click here. More >>