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4 min read May 30, 2023

Everything You Need to Know About RHS Loan

For individuals dreaming of owning a home in rural areas, securing financing can be a challenge. However, the Rural Housing Service (RHS) provides a solution with its specialized loan program.

In this comprehensive guide, we will delve into the details of RHS loans, exploring their purpose, and eligibility criteria.

What is an RHS Loan?

The Rural Housing Service is a division of the United States Department of Agriculture (USDA). They focus on providing assistance and support for rural communities in accessing safe, affordable housing.

The RHS plays a crucial role in promoting homeownership opportunities. It also improves the quality of life for individuals residing in rural areas.

How RHS Mortgages Work?

Here’s a breakdown of how RHS mortgages work:

Loan Programs:
The RHS offers two primary loan programs: the Single Family Housing Guaranteed Loan Program and the Single Family Housing Direct Loan Program.

  • Single Family Housing Guaranteed Loan Program: The RHS guarantees loans issued by approved private lenders.
  • Single Family Housing Direct Loan Program: This program offers direct loans provided by the RHS itself.

To qualify for an RHS mortgage, certain eligibility criteria must be met:

  • Location: The property being financed must be located in an eligible rural area as defined by the RHS. These areas are typically outside of urban centers and have specific population and income requirements.
  • Income Limits: The RHS primarily targets individuals and families with low to moderate incomes with RHS mortgages. Income limits vary based on the location of the property and the size of the household.
  • Citizenship or Legal Residency: Borrowers must be U.S. citizens or have legal residency status.
  • Creditworthiness: While RHS mortgages have more flexible credit requirements, borrowers still need to demonstrate a reasonable credit history.

Application Process:
The application process for RHS mortgages typically involves the following steps:

  • Prequalification: Potential homebuyers can start by contacting approved lenders or the RHS to determine their eligibility.
  • Gathering Documents: Applicants will need to provide documentation such as income verification, bank statements, tax returns, and identification documents.
  • Completing the Application: You will need to fill out the necessary forms and submit them along with the required documents.

Loan Approval and Closing:
Once you submit the application, the lender or RHS will review the information and make a decision regarding loan approval. The loan process may involve underwriting, appraisal, and other evaluations to ensure the property meets safety and quality standards. If approved, you will go through the loan closing process. You will have to sign the necessary legal documents, and the lender or RHS will disburse the loan funds.

RHS mortgages come with affordable repayment terms, including fixed interest rates and extended loan terms. Borrowers are required to make regular monthly payments to repay the loan. The payments typically include the principal amount, interest, and may include escrow amounts for property taxes and insurance.

Loan Servicing and Support
After the loan is closed, the RHS or an approved loan servicer will handle the ongoing management of the mortgage. Borrowers can reach out to the servicer for payment-related queries, changes in financial circumstances, or any other issues.

Types of RHS Loans

RHS a division of the United States Department of Agriculture (USDA), offers two primary types of loan programs.

  • Single Family Housing Guaranteed Loan Program: This Program facilitates homeownership by providing loan guarantees to approved private lenders.
  • Single Family Housing Direct Loan Program: It is designed to provide low income individuals with direct loans directly from the RHS.


RHS offers loan programs that provide backing and support from the government.

It aims to make homeownership more accessible by offering loan guarantees or direct loans with competitive interest rates.


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