ENID, Okla. — A new effort to promote homebuilding opportunities in rural communities has been launched through a collaboration between Oklahoma Municipal League (OML) and Oklahoma Home Buildings Association (OkHBA), and a local homebuilder has been key in getting the program under way.
The Rural Housing Initiative has been about two and a half years in the making, according to David Ritchie, an Enid homebuilder and former board president of OkHBA. The new program utilizes the U.S Department of Agriculture’s 502 program that has been available for many years, and it’s a way to create available funding for home builds for communities and citizens that need access to lending.
After working with various stakeholders in communities and with USDA, Ritchie said he was able to help bring together the collaboration to better utilize the USDA 502 program and provide a database for residents looking to build in rural communities. As of now, the database has about four or five communities participating with 59 listings available.
Communities with lots in the database so far include North Enid, Okeene, Ringwood, Mooreland and McLoud.
“We are in the process of working with cities to get them to identify lots,” Ritchie said.
“We’ve gotten good response. We are just in the initial stages of getting this thing off the ground.”
Why the initiative?
The initiative is about helping to bring new residential construction to small and rural communities in Oklahoma, Ritchie said.
This program is for individual homeowners who want to build a house, the home owner is qualified for the loan and the mortgage company oversees the construction of the house with the building.
“This was the idea of past president David Ritchie,” said Mike Means, executive vice president of OKHBA in a video explaining the program. “Quite honestly, the way it came about was David and I were invited to a meeting with Garber Schools talking about do we get new homes built in Garber.”
Ritchie said Garber officials were hoping to construct spec houses, but there wasn’t interest in it.
Ritchie said a challenge has been finding available building sites in rural communities. OML is helping communities that wish to participate identify available lots they have and aggregate them on this site for both potential homeowners to identify.
“What the builder needed, the USDA didn’t provide, what the USDA did provide, many times it was difficult for the builder to perform within the confines,” Ritchie said in an informational video on the program.
The home builders association wanted to find a way to bundle together all the things USDA required from the builders and put them together with another program or two to deliver some housing to rural Oklahoma. OML has put together a program where the communities that wish to can identify all of the available lots they have in their community for home building sites.
How the program works
This is a USDA 502 guaranteed loan program that structures permanent loans. There is only one closing. The construction loan is closed and there are no more appraisals or anything else to be done.
“This is for communities in Oklahoma that have a population of 20,000 or less,” Ritchie said. “This is not for spec builders, but for individual home buyers who want to build a house.”
Anyone wishing to build a house in one of these communities have to meet certain income limits and qualify for the mortgage. Then, they have to go through the process of finding a builder.
Teaming up with Oklahoma Municipal League to help promote this program provides potential homeowners with eligible communities that are qualified to participate in the program.
Under the program, the homeowner is qualified for the loan, and the mortgage company oversees the construction of the house with the builder. Homeowners get to choose the lot and their builder and get qualified as to what they can afford.
“It’s hopefully a seamless transaction when somebody wants to build a house, a builder is identified and approved to participate in the program, and the mortgage company helps get the house constructed,” Ritchie said.
Qualifications and parameters include:
• The home owner is qualified for the loan.
• The mortgage company oversees the construction.
• It’s 100% financing (no money down).
• 30-year fixed-rate loan.
• Owner must occupy the home as a primary residence.
• Home has to be built by a qualified third party.
• Owner has to be a U.S. citizen or U.S. non-citizen national or qualified alien.
The funds can be used for new residential property, closing costs, essential household equipment. expenses associated with the project, soft costs and other costs associated with closing the loan. The loan amount can never exceed the appraised value of the house.
To list available lots, eligible municipal governments provide the cost associated with purchasing the lot and all the relevant legal details, according to the initiative’s web site. Then, OMC assembles those listings and provides the information in the searchable database.