Loan Leverage Program
Rural Development Loan Leverage Program (RD)
Brief Description: MBOH partners with RD to provide homeownership opportunities to families in rural areas that don't qualify under the regular programs. The homebuyer takes out two loans - the first loan is from MBOH for 10-50% of the purchase price, and the second loan is from RD for the remainder of the purchase price. The interest rate on the RD loan is subsidized as low as 1% to meet the borrower's need. It is important to remember that while the rate on the MBOH loan is fixed for the life of the loan, the RD rate is re-evaluated annually.
Borrower Eligibility Criteria:
Income Limits are on the Rural Development website, look specifically at the “low income” line.
First-time homebuyer(s); waived for targeted area; displaced homemaker; or single parent.
Home must be primary residence as long as the loan remains in place.
No asset limitations.
Must have MBOH approved homebuyer education.
Property Criteria:
Single family home, townhouse, new manufactured home on permanent foundation or condo unit (MBOH will purchase loans on up to 25% of units in a project).
Purchase Price Limit
Limit of 15% for business use.
RD rules that land be limited to 30% of value of property on new construction that has private water or sewer.
Maximum parcel size of 20 acres, with no subdivision of land possible.
Must meet applicable building code and have infrastructure.
New manufactured homes only from approved dealer.
Must be in rural area eligible for RD loans.
Loan Criteria:
Total loan limit cannot exceed area loan limit.
Fixed rate, 30-year term (MBOH portion).
Hazard insurance $1,000 deductible all peril.
Taxes and insurance must be held in escrow on MBOH loan.
IRS and RD recapture potential.
Underwriting Criteria:
Underwriting to RD standards.
Mortgage Insurance Information:
No mortgage insurance required on MBOH portion of the loan, as long as the MBOH portion constitutes 50% or less of the total loan amount.
Lender Reservation and Loan Info:
MBOH pays lender fees for the borrower and regulates points and fees that can be charged. Consult Board staff with any questions.
Reservations are valid for 60 days for existing homes and 180 days for new construction.
A 0.25% fee charged for extensions, 0.50% for cancellation.
Need any multi-lot/repair issues on appraisal addressed before closing.
PREFER
Input on Lender On Line web based reservation system.
Fax in Borrower Stat Sheet and the Homebuyer Education Certificate.
OR
Fax reservation to MBOH, including;
Reservation cover sheet and the required documentation listed.
Special Criteria:
Loan reservation is not automatic - must submit copy of RD commitment sheet for review by MBOH prior to reservation approval. See Exceptions on Lender on Line to check status.
This is a summary of the MBOH program only. For a complete copy of the terms and conditions see Mortgage Purchase and Servicing Guide and the Terms and Conditions of the program.
