USDA Land Loans in Oklahoma – A Helpful Guide

The United States Department of Agriculture (USDA) offers various loan programs to help people in rural areas purchase, build, repair or improve homes One option is USDA land loans, which provide financing to buy and develop sites for housing If you’re looking into USDA loans in Oklahoma, this guide covers key information on eligibility, types of loans, terms, and how to apply.

An Overview of USDA Land Loans

The USDA provides two main types of land loans through its Section 523 and Section 524 programs:

• Section 523 loans help non-profit organizations acquire and develop sites solely to be used for self-help housing construction. Self-help housing is when participants provide some of the labor themselves.

• Section 524 loans assist non-profits in purchasing and developing land to create sites for low- and moderate-income families. The sites can be sold to eligible buyers using USDA single family housing loans or other mortgage financing.

In both cases the non-profit organization takes out the loan and then uses the funds to prepare building sites. Qualified borrowers can then buy the sites to construct new homes. Land loans make it possible for more people to achieve homeownership in rural Oklahoma.

Who is Eligible for USDA Land Loans?

To qualify for Section 523 and 524 land loans, the applicant must be a non-profit organization with legal authority to operate a revolving loan fund. Examples include:

• Private non-profit organizations
• Public non-profit organizations
• Tribal governments
• Community development corporations
• Faith-based non-profits

The non-profit must demonstrate financial strength, management skills, and capacity to comply with relevant laws and regulations.

For Section 524 loans, the sites purchased can only be sold to low- or moderate-income buyers. Low-income is defined as 50-80% of area median income. Moderate income is up to 115% of area median income.

Key Terms and Details of USDA Land Loans

Some key terms and details to understand about USDA land loans include:

• Loan amounts depend on the number of sites to be developed and total project costs.

• The loans have a 5-year term and fixed interest rate. Rates are set monthly.

• Section 523 loans for self-help housing sites have a 3% interest rate.

• Section 524 loans for general sites are below market rate.

• Loan funds can cover purchase price, fees, grading, installation of utilities and water/waste systems, and other approved development costs.

• The loans must meet USDA site development standards for issues like minimum lot size, setbacks, community water supply, and more.

How to Apply for a USDA Land Loan in Oklahoma

If you represent a non-profit interested in a USDA land loan, follow these steps:

• Contact the USDA Rural Development State Office in Oklahoma to discuss the project.

• Work with USDA staff to choose the right loan program and confirm eligibility.

• Submit the site loan application with all required documentation. Work closely with USDA at each stage.

• If approved, use the loan funds to purchase and develop sites per program rules and development standards.

• For Section 524, market and sell sites to verified low/moderate income buyers.

Consult with USDA early in the process for guidance on putting together a competitive, compliant application. They can explain requirements and help set your project up for success.

Tips for Securing USDA Land Loan Approval

Though USDA land loans offer below market rates and favorable terms, you still must meet standards and requirements to get approved. Here are some helpful tips:

• Highlight experience – Document your non-profit’s successful track record developing housing or managing construction projects. This proves capacity.

• Show site viability – Conduct soils tests and other assessments to verify the site is suitable and development costs are accurate.

• Have permits ready – Secure any required permits, zoning variances, and approvals ahead of time to avoid delays.

• Prove demand – Provide evidence of demand for housing in the area to show the sites can sell quickly. Get pre-sales if possible.

• Watch costs – Controlling development costs can improve loan feasibility. Have third-party estimates to justify the budget.

With the right preparation and planning, your non-profit can get approved for a USDA land loan in Oklahoma. This special financing can help bring more affordable housing and homeownership to rural communities.

Other USDA Home Loans in Oklahoma

In addition to land loans, the USDA Rural Development office offers other home financing options in Oklahoma, including:

• Single family housing direct loans – Direct 1% interest loans for low-income buyers unable to qualify for traditional mortgages.

• Single family housing guaranteed loans – The USDA guarantees loans from private lenders to help moderate income buyers with more flexible credit requirements.

• Single family housing repair loans and grants – Provides subsidized loans and grants to very-low income homeowners to repair, improve, or modernize homes.

Check your eligibility and learn about all the USDA home loan programs available in Oklahoma to find the right option for your needs. Their affordable financing can help make your dream of owning a home a reality.