USDA Rural Development 538 Guaranteed Rural Rental Housing Program (GRRHP)

The Guaranteed Rural Rental Housing Program (GRRHP) allows developers of affordable housing to get a loan guarantee for the debt used to finance the project. USDA Rural Development (RD) can guarantee:

• Up to 90% of the loan amount for for-profit entities; and
• Up to 97% of the debt for non-profit entities

In addition, in some instances RD can provide an "interest credit" that will buy down the interest rate on the loan, down to the Applicable Federal Rate. This can have the effect of lowering the developer's annual operating cost by lowering the debt service payments. The developer can, in turn:

• Borrow more debt;
• Lower rents;
• Achieve deeper income targeting; or
• Pay for enhancements, such as funding social services

Rents cannot exceed 30% of 115% of the Area Median Gross Income at initial occupancy, and units must be initially occupied by households that do not exceed this limit. Any rural area with a population of up to 20,000 is eligible. RD has prepared a fact sheet for the GRRHP (148 KB; PDF).

Vermont Housing Finance Agency does not administer nor allocate GRRHP.

VHFA is a lender that has been approved by RD and has utilized this program in the past. If a developer is interested in this program they should first contact Bob MacDonald at RD by calling 802.828.6015 or through the RD Web site.

The developer can then meet with VHFA or another lender and work jointly on an application for GRRHP funds, which is completed by the lender and submitted to RD.