USDA Single Family Housing Section 502 Direct Home Loan Program (Montana)

What is USDA Single Family Housing Section 502 Direct Home Loan Program (Montana)?

USDA Single Family Housing Section 502 Direct Home Loan Program (Montana) is a first mortgage for homebuyers in Statewide, Montana, administered by USDA Rural Development - Montana State Office (Single Family Housing Direct Programs).

• The USDA Section 502 Direct Home Loan Program helps low- and very-low-income applicants in eligible rural areas of Montana buy, build, repair, or relocate a modest home with no required down payment. USDA provides the mortgage directly and applies 'payment assistance,' an interest subsidy that can lower the effective rate to as little as 1% based on adjusted family income. Terms run up to 33 years (38 for very-low-income borrowers). The interest subsidy is subject to subsidy recapture when the home is sold or the borrower moves out.
• No down payment required.
• Effective rate as low as 1% via payment assistance.
• Terms up to 33-38 years.
• Direct federal loan for very-low and low-income rural buyers.
• Funds purchase, construction, or site improvements.
• This is a federal program, so it is available beyond a single state or city.
• Funding comes from Federal appropriations to USDA Rural Development (Section 502 Direct revolving program).

Do you have to pay it back?

USDA Single Family Housing Section 502 Direct Home Loan Program (Montana) is a first mortgage and is repaid under the terms set by USDA Rural Development - Montana State Office (Single Family Housing Direct Programs).

• Repayment is triggered by Payment-assistance (interest subsidy) is subject to subsidy recapture: borrowers repay all or a portion of the subsidy when title transfers or they no longer occupy the home.
• The assistance is recorded in First (direct mortgage from USDA Rural Development). position.
• Forgiveness and repayment terms are set by the program and can change — confirm them on the official program page before applying.

Who qualifies?

USDA Single Family Housing Section 502 Direct Home Loan Program (Montana) is open to buyers who will live in the home as their primary residence.

What are the income limits?

USDA Single Family Housing Section 502 Direct Home Loan Program (Montana) limits household income to 80% of the area median income, which varies by county and household size.

• Very-low income is below 50% AMI; low income 50-80% AMI. Most Section 502 Direct assistance targets below 50% AMI. Dollar limits vary by county and household size per USDA Income & Property Eligibility site.
• The limit applies to total household income, not only the borrower’s.
• Area median income figures are published by HUD and updated annually, so check the current table for the county before relying on a number.

What kind of home can it be used for?

USDA Single Family Housing Section 502 Direct Home Loan Program (Montana) caps the purchase price as follows: No fixed cap; home generally may not exceed the area loan limit and must be modest in size, design, and cost for the area.

• Eligible property types include Single Family, Condo, and Manufactured.
• New construction is eligible.
• Manufactured homes are eligible.

Where does it apply?

USDA Single Family Housing Section 502 Direct Home Loan Program (Montana) is a federal program, so it is not limited to Montana.

How do you apply?

Applications for USDA Single Family Housing Section 502 Direct Home Loan Program (Montana) go through USDA Rural Development - Montana State Office (Single Family Housing Direct Programs), which publishes the current terms and the application steps on its own site.

1. 1

   Contact USDA Rural Development - Montana State Office (Single Family Housing Direct Programs) to reserve funds

   Funds are reserved through Applications taken directly by the USDA RD Montana State Office on an ongoing basis (subject to annual funding)., and are subject to availability.

2. 2

   Work with a lender who handles the program

   Hey Prescott is not a lender and does not accept applications; this page describes the program so a buyer can take it to a lender or housing counselor.