USDA program contributes to high homeownership

USDA program contributes to high homeownership by Lynn Jensen, State Director, USDA Rural Development June is National Homeownership Month, a time to note our accomplishments as a nation in achieving the American dream.

According to recently released Census figures, the rate of homeownership by Americans � at 68 percent for the first quarter of 2002 � continues at a record level. This is true in every region of the country, among all races and ethnic groups, for all age categories and among all levels of income.

The picture is even brighter in America�s rural areas. For more than 35 years, the homeownership rate outside metropolitan areas has exceeded 70 percent. At the end of 2001, it was an even 75 percent, according to Census reports.

Part of the success among these diverse groups and in rural areas can be attributed to a long-time federal program. For more than 50 years, the U.S. Department of Agriculture has been making loans directly to low-income families to purchase their homes. In South Dakota in Fiscal Year 2001, 960 families were served and $74.5 million was invested in both individual and multi-family homeownership loans and grants.

Administered by USDA Rural Development�s Rural Housing Service, the Section 502 Direct Loan program was established by the Housing Act of 1949. The first loan was closed in 1950. The program was made available to non-farmers, beginning in 1961.

With more than $55 billion invested and millions of homeowners later, the basics of this successful program remain the same. It provides an opportunity for those shutout by other lenders to own their own home. It works by making loans available to low-income families with no down payment and installments reduced to a one-percent interest rate level.

As the household becomes established � increasing income and building equity in the property � the loan, including part or all of the assistance received, is repaid. This allows low-income, rural families to share in the American dream of homeownership, along with all the benefits. It has clearly contributed to the high overall rate of homeownership.

In Fiscal Year 2001, Section 502 Direct Loans totaling $1.064 billion were provided to more than 15,600 families to buy their own home. In addition, the Rural Housing Service guaranteed more than 30,000 loans of $2.3 billion from other lenders (through a program begun in 1990), allowing slightly higher income households to buy homes without down payment at competitive rates and terms. Another $61 million was provided in low-interest loans and grants for repairs and improvements to nearly 12,000 of the poorest rural households, especially the elderly.

USDA Rural Development operates out of 10 office locations and dedicates staff to affordable housing opportunities across South Dakota. Our employees live in local communities and understand the needs of South Dakotans. I strongly encourage those in need of affordable housing to include USDA Rural Development as they seek homeownership.

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