Federal grant home improvement loan repair

Loan programs help residents buy, build or repair homes

With the help of a federal rural housing program, Cory and Mandy Nesseth of Holmen, Wis., have become homeowners for the first time.

The first time was just in time.

"We were renting a small two-bedroom house in Holmen," Mandy said last week. "Then Jaden came along, and we needed something bigger," she said, referring to the Nesseths' 7 1/2-month-old son, who wiggled on her lap as she spoke.

The Nesseths obtained a $90,000 loan from Park Bank to buy their one-story yellow house in Holmen in late March.

They were able to buy it without a down payment, because of the U.S. Department of Agriculture Rural Development home ownership loan guarantee program, which guaranteed 90 percent of their loan principal. Under that program, if the borrower defaults on the loan, the agency will pay the lender the amount of the loan guarantee.

Because the Nesseths didn't have to make a down payment, they had money they needed to finish the basement and make some needed repairs to their new home.

Cory, 24, and Mandy, 25, said the loan guarantee program is a good one that makes homes available to people who otherwise could not afford them. "It's especially good for first-time owners," Mandy said.

It is one of three housing programs that the USDA Rural Development field office in Viroqua, Wis., uses to help low- and moderate-income people buy or repair homes in La Crosse, Vernon, Richland and Crawford counties.

Under the loan guarantee program, loans to buy or build a house are made by approved lenders, no down payment is required, and mortgages are for 30 years at a fixed interest rate negotiated with the lender. In some cases, closing costs and repairs can be included in the loan. Moderate-income limits apply - for example, the annual income limit for a family of four is $63,250.

Under the direct housing program, loans to buy or build a home are made by the federal agency for 33 to 38 years at a fixed interest rate, the loan payment is subsidized by the government based on household income, and no down payment is required. Low-income limits apply - for example, the annual income limit for a family of four is $40,650.

Under the home repair grant and loan program, loans are available at 1 percent annual interest for up to 20 years. Home owners age 62 and older are eligible for home improvement grants. Very-low-income limits apply - for example, annual income limits are $25,400 for a family of four, and $20,300 for a family of two.

In the fiscal year that ended last Sept. 30, the USDA Rural Development Viroqua office was involved in underwriting 86 loans under the three programs, said Susan Weber-Johnson, community development manager for the office.

That included 28 under the loan guarantee program, 36 under the direct loan program and 22 under the home repair loan and grant program. Those figures don't include another 10 loan guarantees in the four-county area that were handled by the agency's state office.

"The numbers have pretty dramatically increased in the last few years," Weber-Johnson said. "I think the main reason is that we do a lot more marketing now," to let the public know about the programs.

Another reason for the increased activity is that Holmen homes have been eligible for the three programs for the past 4 1/2 years, because of a change in how rural areas are defined. Holmen homes were not eligible until the change was made.

The cities of La Crosse and Onalaska are the only places in the four-county area that are not eligible for the three USDA Rural Development housing programs. They are not eligible because their populations exceed 10,000.