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Guaranteed Rural Housing
Reach more borrowers in rural communities

Reach underserved markets more easily with loans guaranteed by RHS under its Section 502 Guaranteed Rural Housing (GRH) Loan Program.

Through the GRH program you can meet the needs of rural borrowers who have the necessary income and credit history, but not the down payment required to qualify for a conventional mortgage.

Freddie Mac purchases assumable and non-assumable GRH loans through our Fixed-rate Cash, Fixed-rate Guarantor and MultiLender Swap executions. Sellers must obtain prior approval to sell Section 502 GRH mortgages to Freddie Mac and they must be sold with recourse. The terms under which Freddie Mac purchases GRH loans are included in Chapter 35 of the Single-Family Seller/Servicer Guide (Guide).

Full and complete information about the GRH loan program is available from RHS offices.

Feature Requirements
Property Type
  • 1-unit primary residences, including single-family dwellings, condominiums, planned unit developments (PUDs) and eligible manufactured homes.
  • Non-farm
  • Leasehold and rehabilitated properties
  • Property must meet the rural designation as defined by RHS
Eligible Mortgage Products
  • 30-year fixed-rate mortgages
  • Assumable and Non-assumable
Borrower Eligibility
  • Determined by RHS requirements
Transaction Type
  • Purchase transactions
  • No cash-out refinances
  • Subject to Section 502 GRH Loan Program guidelines
Maximum LTV Ratios
  • Maximum LTV of 102 percent when financing allowed closing costs
Eligibility/Underwriting
  • Non-Loan Prospector only
  • Assumable mortgages must be sold to Freddie Mac with recourse within the meaning of Guide Section 11.10(a)
  • The Note Date may not exceed 12 months prior to the delivery date
  • Secondary financing is generally not permitted
  • Mortgage insurance is not required based on government guarantee
  • The mortgaged premises securing FHA and VA mortgages and assumable Section 502 GRH Mortgages may be transferred in accordance with applicable FHA, RHS or VA regulations
  • Maximum loan amount may not exceed Freddie Mac loan limits or any RHS loans limits for this program.
  • Underwriting requirements are based on RHS program requirements and take into consideration the unique needs of borrowers in rural locations. See the GRH program requirements for more information.
Execution Options
  • Fixed-rate Cash, servicing-retained
  • Fixed-rate Guarantor
  • MultiLender Swap
Delivery Fees
  • Postsettlement delivery fees may apply based on the individual characteristics of the mortgage. See Guide Exhibit 19 [PDF 183K] for details on applicable fees.
  • No unique postsettlement delivery fee for assumable Section 502 GRH mortgages.
  • Non-assumable GRH mortgages secured by manufactured homes will be assessed an additional manufactured home postsettlement delivery fee, unless they are sold to Freddie Mac with full recourse or indemnification
Special Delivery Requirements
  • Cash Delivery requirements
    • When selling Section 502 GRH mortgages for cash in the selling system, use the drop-down menu and select the applicable contract product and loan product:
      • Contract Product: 30-year Fixed-rate FHA/VA; Loan Product: 30-year assumable 502 Guaranteed Rural Housing (GRH)
      • Contract Product: 30-year non-assumable 502 Guaranteed Rural Housing (GRH); Loan Product: 30-year non-assumable 502 Guaranteed Rural Housing (GRH)
      • Offer Product Numbers are not required for mortgages sold through the selling system
  • Pooling requirements
    • Non-assumable Section 502 GRH mortgages delivered under the Guarantor program may be purchases and pooled together with fixed-rate conventional mortgages
    • Assumable Section 502 GRH mortgages may be delivered under the Guarantor program following FHA/VA pooling requirements
 Guidelines
  • Refer to Section 35.2 of your Single-Family Seller/Servicer Guide

 

Download a Guaranteed Rural Housing fact sheet [PDF 182K] for more details.

Lender Benefits

The Section 502 GRH Loan Program allows you to:

  • Broaden your market reach with a competitive affordable housing product designed specifically for rural areas
  • Expand Community Reinvestment Act (CRA)-eligible origination volume
  • Leverage Freddie Mac as your secondary market outlet for GRH loans

Benefits for Your Borrowers

The Section 502 GRH Loan Program helps your borrowers by: 

  • Eliminating down payment and reserve requirements
  • Allowing certain closing costs, including the two percent guarantee fee, to be included in the loan amount under certain circumstances, and offering various options for funding, subject to GRH Section 502 program restrictions
  • Allowing additional flexibility with no cash-out refinancing as permitted under the GRH Section 502 program

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