On June 21, 2019, the U.S. Department of Agriculture (USDA) Rural Housing Service (RHS) published a final rule adopting changes to the RHS guaranteed and direct single family loan programs proposed in August 2018 that:
- Revise the definition of very low-, low-, and moderate-income to allow for a two-tier income limit structure (also known as income banding) within the single family housing direct loan and grant programs.
- Clarify that net family assets are not considered when calculating repayment income, and that net family assets exclude amounts in voluntary retirement accounts, tax advantaged college, health, or medical savings or spending accounts, and other amounts deemed by the Agency not to constitute net family assets.
- Revise the methodology used to determine the area loan limits to use a percentage(s), as determined by the Agency, of the applicable local HUD section 203(b) limit.
- As a result of income banding, converting borrowers currently receiving payment assistance method 1 to payment assistance method 2 should they receive a subsequent loan.
- Revise the definition of low-income to allow for the two-tier income limit structure (income banding) within the single family housing guaranteed loan program.
The only differences from the proposed rule were a revision to the definition of rural area to cite the statute and a technical correction to the suspension and debarment requirement. The changes will become effective on July 22, 2019, except for the revised area loan limit methodology which will become effective on August 5, 2019. NAR previously sent comments in support of these changes.