Maine 
Section 502 Direct Loan Program-Fact Sheet
HOW TO APPLY
:
- Click here to contact an area office. Basic information will be provided over the telephone, and an application will be mailed to you to be completed and returned to the office; or an appointment will be scheduled.
---PROPERTY REQUIREMENTS---
- Single family dwellings located in rural areas of Maine. Rural Development is restricted to financing in rural areas and therefore there are some ineligible areas.
LOAN PURPOSES:
- New construction (fully built for less than one year). Plans must be certified by an authorized official. Construction Phase Inspection Reports are required (foundation, shell, and final inspections). Note-if the builder provides and insured 10 year warranty plan acceptable to Rural Development, the builder can self-certify plans and only a final inspection is needed.
- Purchase or purchase and improve/repair an existing dwelling (fully built for more than one year).
- Finance certain new manufactured homes.
- Pay fees for legal services, title clearance, loan closing, appraisal, survey, processing and other fees typical for the area.
REFINANCING:
- Must show inability to make current loan payments.
- Loan must have been for eligible loan purposes.
- Cause for inability to make payments is for reasons beyond your control - i.e. reduction in income.
LOT SIZE:
- Modest lot not to exceed 30% of the appraised value; and, which cannot be subdivided to make another house lot.
PROHIBITED AMENITIES/UNAUTHORIZED LOAN PURPOSES:
- Inground swimming pools.
- Properties located in flood hazard zones.
- Properties in ineligible areas.
- Income producing properties.
DOWN PAYMENT:
- None Required.
INCOME LIMITS:
- HUD very low, low and 38 year term Limits – available in any RD office. Based on Adjusted Family Income as defined in our regulations.
---APPLICANT ELIGIBILITY---
- Pre-qualification within 5 working days from receipt of a complete application, based upon information submitted by applicant.
INCOME REQUIREMENTS AND VERIFICATION:
- The family's adjusted income may not exceed the applicable limit based on the applicant's household size.
- Income must be dependable and adequate.
- ALL household income must be counted including base pay, overtime, bonuses, commissions, social security, AFDC, support, etc. Also, all income in the household is counted regardless of whether the individual signs the promissory note. Only income received by individuals signing the promissory note is considered in ratio determinations.
DEBTS AND CREDIT:
Must Count:
Do Not Need To Count:
Credit History:
FEES:
- Credit Report $28.00 for individual and $38.00 for joint reports.
- Appraisal fee $280.00.
- Tax service fee $95.00.
- Appraisal fee and tax service fee can usually be included in the loan.
RATIOS:
- Principal, interest, taxes (real estate and sewer) and Insurance, homeowners/road maintenance fees (PITI) – very low-income applicants not to exceed 29% of gross monthly income; low-income applicants not to exceed 33% of gross monthly income.
- Total Debt (TD) from all income categories not to exceed 41% of gross monthly income.
MAXIMUM FINANCING:
- 100% of appraised value not to exceed loan limit for the county (see HUD 203b limit http://www.hud.gov/fha/sfh/sfhhicos.html).
MAXIMUM TERM:
INTEREST RATE:
Currently 6.75% with subsidy available to qualified applicants. Minimum interest rate is 1%.
OTHER CREDIT:
- Must not be able to obtain other credit through conventional sources, including a Rural Development guaranteed loan.
SUBSIDY RECAPTURE:
- If payments are subsidized through a reduction in the interest rate, some of the subsidy granted may have to be paid back when the property is sold, or title is otherwise transferred.
AVAILABILITY OF FUNDING:
- Funding is allocated to each state in October of each year and is typically limited. Priority is given to:
- Rural Development assumable mortgages.
- Hardship situations.
- Properties owned by Rural Development (in government inventory).
Loans with a significant portion of leveraged funds from other sources (usually 20 percent or more).
FINDING PROPERTY:
WHO CAN ASSIST IN COMPLETING APPLICATIONS:
- RD employees.
- Many real estate agents and brokers.
- Most local CAP agencies.
HOW TO APPLY
:
Click here
to contact an area office. Basic information will be provided over the telephone, and an application will be mailed to you to be completed and returned to the office; or an appointment will be scheduled.
Click here to obtain more information on our 502 loan program, or to request an application.
If you would
like to review USDA; Regulations, Procedures, Notices, RD Forms, or RD Handbooks, Click Here.
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