While the housing market in rural Alabama doesn’t always follow national trends, it seems to be on the same page right now: low inventory and high prices. Homebuyers across the country are struggling to find affordable homes for sale anywhere, whether they’re in New York City or Selma, Alabama.
Homeownership plays a vital role in establishing and sustaining strong communities. It allows people to build generational wealth, reach financial stability and grow roots where they live.
Traditionally, homeownership rates have been higher in rural communities than the national average, but barriers like high-cost loans and overall rising real estate prices still cause difficulties for potential homebuyers in rural Alabama.
Because of these challenges, the United States Department of Agriculture’s Alabama Rural Development office operates a number of programs that help residents of non-metro areas to access safe, affordable housing.
Over the past fiscal year, the office has invested $401.7 million in rural and Tribal communities to help people buy, repair and build homes. From July 1, 2021, to June 30, 2022, these USDA funds have gone to 2,243 families and individuals in Alabama.
The USDA dispersed the investments through its single-family housing programs, but it provides additional support through multi-family rental assistance programs as well.
“’Home’ is a word with many meanings,” Alabama director Nivory Gordon said in a press release last week. “It’s the community that you’re from or that you live in. It’s the place that you’re connected to. It’s the structure in which you live, no matter if it’s a home that you own, or a place that you rent. Through USDA’s programs, we here in Alabama are hard at work helping families and individuals get into safe and comfortable places to live, to raise a family, or to proudly call ‘home.’”
If you live in rural Alabama and need help purchasing, repairing, building or renting a home, here is a breakdown of some of the USDA programs available to you.
Programs for single families or individual homes
If you are a low-income individual who needs help affording “decent, safe and sanitary housing” in rural Alabama, the Single Family Housing Direct Home Loans Program could help. It provides payment assistance, partially subsidizing mortgage payments for a period of time.
Among other requirements, applicants must be unable to obtain a loan from other resources on terms and conditions that can reasonably be expected to meet, and they must agree to occupy the property as their primary residence.
As of July 1, the current interest rate for loans through this program is 3.25% for low-income and very low-income borrowers. Payback periods can extend up to 33 years for low-income participants and 38 years for very low-income participants.
If your adjusted household income is closer to your area’s median and you are looking to purchase, build, or rehabilitate a rural home as your primary residence, the Single Family Housing Guaranteed Loan Program could be best for you. Essentially, this program allows the USDA to partner with private lending institutions, backing their loans.
For this program, the maximum adjusted household income in many rural Alabama counties is around $103,500.
Another option is the Home Repair Loan and Grant Program, which solely provides loans and grants to help families and individuals repair their homes to make them safer, healthier places to live.
Programs for apartments and rental assistance
When it comes to the multi-family programs, the USDA offers ways for owners of apartment buildings or multi-tenant homes to lower rent for low-income individuals.
The agency works with private-sector lenders to finance projects that increase the supply of affordable rental housing for low- and moderate-income people in eligible rural areas and towns. The assistance ensures low-income and elderly tenants do not pay any more than 30% of their income in rent.
Over the past year, the USDA’s third top lending partner nationwide was Hometown Lenders, Inc., based out of Huntsville. The firm loaned money for 67 rural individuals and families to buy homes backed with an USDA loan guarantee.
Overall eligibility
For many of these programs, applicants must have an adjusted income that is at or below the applicable low-income limit for their area, and their area must meet the USDA’s definition of rural.
Income limitations vary based on the number of people in a household and the average income in the area. For most rural counties in Alabama, a household with one to four people is considered low-income between $49,300 and $51,500. Applicants can check specific income eligibility on the USDA Rural Development site.
To see if your location qualifies as rural, visit the USDA’s rural eligibility site. Generally, excluded areas in Alabama include Montgomery, Birmingham, Mobile, Gadsden, Anniston, Auburn-Opelika, Dothan, Tuscaloosa, Huntsville, and Florence.
Hadley Hitson covers the rural South for the Montgomery Advertiser and Report for America. She can be reached at hhitson@gannett.com.
