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
- Must be without sufficient
resources to obtain necessary housing
- He/she must be a U.S. citizen
- Have legal capacity to obtain a
- Personally occupy the home on a
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:
footing,  rough-in and,  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.