Definition of Rural Housing Service (RHS)

What is the Rural Housing Service (RHS)?

The Rural Housing Service (RHS) is an administrative division within the US Department of Agriculture that administers programs that focus on community service facilities and rural housing. The programs are designed to improve the quality of life in rural communities in the United States.

Key takeaways

  • The Rural Housing Service (RHS) is part of the Department of Agriculture that provides mortgage assistance to rural households.
  • RHS lends directly to low-income borrowers in rural areas and also guarantees RHS-compliant loans from approved lenders.
  • RHS operates loan programs for community services like health care clinics, police and fire stations, schools and child care centers, and for things like first aid equipment and vehicles.

Understanding the rural housing service

The Rural Housing Service primarily administers direct loans and loan guarantees to low- to moderate-income individuals who wish to purchase, build, or rehabilitate a single-family rural home. Eligibility is based on many factors, including income, family size, and location. For example, a four-person household in DeKalb County, Ill. With an income equal to or less than $ 37,500 you would qualify for a direct home loan with an annual interest as low as 1 percent. The same-size family in the same county with an income of up to $ 86,250 could qualify for a conventional, government-guaranteed private mortgage.

Locations must also meet the definition of the government of a rural area, which can be based on many factors, including population, distance to urban centers, and even less tangible qualities such as “rural character”.

Direct RHS Loans and Secured Private Loans

RHS direct loan applicants must be unable to obtain a conventional mortgage and must currently live without decent, safe and sanitary housing, among other requirements. Typically, the home to be purchased should be no more than 2,000 square feet and may not include businesses or have amenities such as an in-ground pool. The requirements for secured loans are less stringent.

RHS also administers subsidized loans to upgrade or modernize older rural homes. Loans of up to $ 20,000 at 1 percent annual interest can be used for almost any type of improvement or repair; The same income eligibility requirements apply as for direct mortgages. Additionally, RHS offers home repair grants of up to $ 7,500 to low-income residents age 62 and older. Grant money must be used to correct health and safety hazards.

Critics of the RHS programs have called for an end to its loan service, saying it distorts housing prices in rural areas. Instead, they recommend that a free market would serve low-income families looking to buy a home of their own.

Cooperative Housing, Clinic, and Library Loans and Grants

In addition to individual homeowner programs, communities can apply for long-term subsidized loans for cooperative or affordable rental housing for underserved rural populations, such as low-income, families, the elderly and the disabled.

Another RHS program helps plan and fund community facilities such as hospitals, health clinics, nursing homes, food pantries, and libraries. Direct and subsidized loans for the planning and construction of such facilities are prioritized for communities with a population of 5,500 or less, and a median income 80 percent below the state’s non-metropolitan median income. Competitive grants are also available, with somewhat different eligibility requirements. Communities that have raised matching funds have priority in awarding grants.

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Mark Holland

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