Rural Rental Housing Loans

To provide economically designed and constructed rental and cooperative housing and related facilities suited for rural residents.

Applicants may be individuals, cooperatives, nonprofit organizations, State or local public agencies, profit corporations, trusts, partnerships, limited partnerships, and be unable to finance the housing either with their own resources or with credit obtained from private sources. However, applicants must be able to assume the obligations of the loan, furnish adequate security, and have sufficient income for repayment. They must also have the ability and intention of maintaining and operating the housing for purposes for which the loan is made. Loans may be made in communities up to 10,000 people in MSA areas and some communities up to 20,000 population in non- MSA areas. Applicants in towns of 10,000 to 20,000 should check with their local Rural Development; office to determine if the agency can serve them. Assistance is available to eligible applicants in States, Puerto Rico, the Virgin Islands, Guam, American Samoa, the Northern Marianas, and the Trust Territory of the Pacific Islands.

Occupants must be very low-, low- or moderate-income families households, elderly, handicapped, or disabled persons.

Applicants must furnish evidence of the following: (a) A comprehensive market analysis showing the need for such service; (b) a legal capacity to incur the obligation and operate the housing; (c) a sound budget; (d) good credit history; (e) inability to obtain necessary funds from other sources on terms and conditions that would enable the applicants to rent the units for amounts that are within payment ability of eligible very low, low-, or moderate-income family, households, elderly, handicapped, or disabled occupants.

Loans can be used to construct, or to purchase and substantially rehabilitate rental or cooperative housing or to develop manufactured housing projects. Housing as a general rule will consist of multi-units with two or more family units and any appropriately related facilities. Funds may also be used to provide approved recreational and service facilities appropriate for use in connection with the housing and to buy and improve the land on which the buildings are to be located. Loans may not be made for nursing, special care, or institutional-type homes.

Loans are for up to 30 years at an effective 1 percent interest rate, and are amortized over 50 years. A current rate is used for the promissory note but thereafter is used only to determine maximum rent payments. Tenants pay basic rent or 30 percent of adjusted income, whichever is greater. RHS rental assistance subsidy can be used to limit tenant payment to 30 percent of their income. Loans made through contracts entered into on or after December 15, 1989 cannot be prepaid.

The Section 515 Program is awarded through a Notice of Solicitation of Applications (NOSA) announced in the Federal Register.

Applications will be scored on the following factors: (1) the presence and extent of leveraged assistance for the units that will serve RHS income-eligible tenants at basic rents comparable to those if RHS provided full financing, computed as a percentage of the RHS total development cost. (0 to 30 points); (2) the units to be developed are in a Colonia, tribal land, EZ, EC, or REAP community, or in a place identified in the State Consolidated Plan or State Needs Assessment as a high need community for multifamily housing. ("State" refers to the State Government.) (20 points); (3) the loan request includes donated land meeting the provisions of 7 CFR section 3560.56(c)(1)(iv). (5 points); (4) in States where RHS has an on-going formal working relationship, agreement or Memorandum of Understanding (MOU) with the State to provide State resources (State funds, State RA, HOME funds, CDBG funds, or Low-Income Housing Tax Credits) for RHS proposals; or where the State provides preference or points to RHS proposals in awarding such State resources, 20 points will be provided to loan requests that include such State resources in an amount equal to at least 5 percent of the total development cost. (National office initiative) (20 points); (5) Presidentially Declared Disaster Area Pursuant to 7 CFR 3560.56(c)(1)(iii), points will be awarded if the property will be constructed or rehabilitated in a Presidentially declared disaster area in 2011. (10 points); and (6) Energy Initiatives, Properties may receive points for energy initiatives. (0 to 42 points).

Within 30 days, States will review and score the applications and submit a list of applications in rank and point score order to the National Office. Following the State's submission of applications to the National Office, within 30 days the National Office will rank applications on a nation-wide basis and advise States of the results.

Applicants may reapply at the next Notice of Solicitation of Applications (NOSA).

Applicant may request reconsideration on the basis of pertinent facts concerning the application.