Program includes subsidized rates, 100% LTV
By PATRICK CROWLEY
4/11/2003

Hoping to increase home ownership opportunities the federal government has increased the mortgage limits for a program geared to mainly to low-income buyers.

New mortgage limits went into effect March 24 for the Rural Housing Direct Loan program administered by the United States Department of Agriculture (USDA).

Last year under the program 43,640 homes were purchased for a total of $3.48 billion, said Tim McNeilly, acting director for legal and public affairs for the main Rural Development office in Washington.

The mortgage limits, which vary state to state, rose approximately 22 percent across the country, McNeilly said.

The limits have not been increased since Dec. 30, 1998. The USDA moved to increase the limits "because there have increases in housing costs and the limits needed to be adjusted," McNeilly said.

Using local economic data mortgage limits are tailored to every county in the nation by individual state USDA Rural Development offices.

USDA mortgage guidelines stipulate that applicants must have the ability to repay a loan, live in the residence they purchase and be either a U.S. citizen or a non-citizen admitted to the country for permanent residence. The applicant's family income cannot exceed 80 percent of the county median income.

According to the USDA states have two options for setting mortgage rates: Using local residential housing cost figures along with the typical market value for an improve home site; or adopting mortgage limits of State Housing Authorities provided that limit is within 10 percent of the area loan limit as established by the first criteria option.

The USDA said in a statement that qualifying applicants can attain up to 100 percent financing to purchase an existing home, buy a site to build a home or purchase a newly built home in a rural area.

No down payment is required for the 33-year fixed rate loans. The USDA may also subsidize the interest rate, which would lower the monthly mortgage payment.

USDA data shows that last year the top five states by the number of loans made as well as the largest and smallest mortgage loans made in that state were: Georgia, 158 loans, $145,350, $101,000; Illinois, 99 loans, $154,000, $117,100; Alabama, 67 loans, $110,000, $94,000; Florida, 67 loans, $118,835; $88,769; California, 58 loans, $280,749, $141,492.

Maui County in Hawaii in the county with the highest limit, $285,440. The lowest is Dade County, Fla., at $88,769.

In Wisconsin alone over the last two years homebuyers qualifying for the program took $70 million in new mortgages to purchase nearly 900 homes, said state program director Frank Frassetto.

"The heightened (mortgage) limits will enable families to select from a wider range of available housing and will make new construction more of a viable alternative where needed," Frassetto said in a statement.

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