To be eligible for an FmHA loan, an applicant’s adjusted annual income may not exceed 100 percent of an area’s moderate-income level as determined by HUD. (Income level is based on family size and location). The applicant must prove creditworthiness, demonstrate adequate repayment ability (measured by MOTI and PITI maximum ratios of 41 and 29), and have dependable income. Other requirements of an applicant include:

• He/she must not already own a dwelling
• Must be without sufficient resources to obtain necessary housing
• He/she must be a U.S. citizen
• Have legal capacity to obtain a loan and,
• Personally occupy the home on a permanent basis.

FmHA loans may be obtained for purchases of new dwellings and/or purchase and repair of existing dwellings but not for refinancing purposes. The dwelling must be structurally sound and meet FmHA minimal thermal standards (available from any local FmHA office). New construction loans require the following inspections:[1] footing, [2] rough-in and, [3] final. Alternately, the new home may be covered by a 10-year homeowner warranty with just a final inspection.

Generally, FmHA loans have a maximum loan amount and homes must be located in a rural area. The greatest advantage of this guaranteed loan program is that the loan can be made for up to 100 percent of market value.

The lender completes a loan application form and submits it with your credit report, income verification, and other attachments to the local office. If approved, the local office will request funding and issue a conditional commitment to the lender. Once the commitment has been received and accepted by the lender, the lender may close the guaranteed loan.