Federal and State Funding Resources for North Shore Home Buyers

The Cook County Housing and Redevelopment Authority (HRA) has published links on its website to a number of resources for homeowners and home buyers in the Arrowhead region. 

The HRA, which began earlier this year, has been working on identifying all of the current and future housing needs in Cook County. The county has been dealing with affordable housing issues for the last several decades.

Among the resources listed on its website are links to the Rural Development (RD) agency of the  U.S Department of Agriculture (USDA). The RD offers several programs to provide homeownership opportunities to rural Americans, and home renovation and repair programs along with rental assistance programs for seniors, the disabled, and low-income rural residents.

The RD homeownership programs feature the so-called Sect. 502 loans. There is a Direct Loan Program where the USDA (the government) is the lender and a Guaranteed Loan Program where a private firm is a lender and the USDA guarantees 90% of the loan.

These loans are designed to help rural residents buy or build a home in Cook and Lake Counties. The maximum loan amount is $336,500 and the repayment term is 33 years, with some rare exceptions for very low-income buyers. The interest rate for a Direct Loan as of November 1 is 3.25%. Significantly, no down payment is required at closing.

As it is a government program, some conditions do apply. The home needs to be 2,000 square feet or smaller and its market value cannot exceed the maximum loan amount. Any payment subsidies that homeowners receive under the program must be repaid if the home is sold. Loans are intended for owner-occupied properties that are not designed for income-producing activities.

The income limits for borrowers seeking these RD loans are surprisingly generous. Here in Cook County, the USDA considers a potential borrower a “very low-income” if adjusted income is under $41,650. It considers “low income” to be $66,650 annually.

The basic requirements for the Direct Loan Program also apply to the Guaranteed Loan Program although the private lenders may have additional guidelines regarding the credit history of applicants. It is still offered as a zero-down payment mortgage with relatively lower interest rates.

The HRA recognizes that maintaining and improving the existing housing stock in our rural area is a key part of its efforts to resolve the housing crisis. According to the USDA website, the RD program for Single Family Housing Repair Loans and Grants “provides loans to very-low-income homeowners to repair, improve or modernize their homes or grants to elderly very-low-income homeowners to remove health and safety hazards.”

To qualify for these loans/grants for home repairs, applicants must be the owner/occupant of the property, unable to find suitable credit elsewhere, and have adjusted annual income at or below the $41,650 level, what USDA calls “very low.”

The repair loans have a 20-year term with a 1% interest rate. The maximum loan is $40,000 and the maximum outright grant if given is $10.000. They may be combined if repair and renovation costs equal or exceed $50,000.

Every real estate transaction is unique and there is no way that the HRA can advise individual home buyers/owners about their personal situation. Fortunately, the RD has a branch office of the USDA in Virginia, MN that has experts on these loans and grants. They can be reached by phone at (218) 741-3929. The RD also has comprehensive information about these programs on its website https://www.rd.usda.gov/

The HRA website,https://www.cookcountyhra.org/, contains information about its work to date along with links to homeownership programs offered by the State of Minnesota. These include loans covering down payments and closing costs for first-time and repeat home buyers. 

To address the issue of restoring and rehabilitating older housing, Minnesota offers its Housing and Home Improvement Programs. Loans may be between $2.000 and $75,000 and require little to no equity in the home and are offered through private lenders. Occupancy is required with a household income limit of $155,500. There is no income requirement if the loan is intended for energy or accessibility improvements.

Residents looking for one of these programs may have to do some digging. Go online to the HRA site and follow links to the sites from there. Contact the agencies shown. Discuss these options with a realtor or local banker. 

With the known challenges of finding and buying housing on the North Shore, the first steps of this research have been taken care of by the HRA.