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Rural Lot Purchase Program

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A Financing Tool for Building Our Communities

The Iowa Finance Authority provides loans to assist in the purchase of lots for the purpose of building speculative homes in rural communities.

Applications are accepted on an ongoing basis.

Eligible Applicants

  • For profit or non-profit developers

Eligibility Requirements

  • Lots in any Iowa community except those located within one of the ten most populous counties in the state. These counties include: Black Hawk, Dallas, Dubuque, Johnson, Linn, Polk, Pottawattamie, Scott, Story and Woodbury.

  • No more than three Rural Lot Purchase Loans shall be provided in a community at the same time.

  • The Rural Lot Purchase loans shall only be used to purchase lots in an arm’s length transaction and is not available for lot refinances.

  • The sale price of the home cannot exceed $250,000.

  • The construction lender must originate the construction loan from a bank branch located in Iowa.

Loan Terms

  • IFA will provide a loan to the borrower for the lesser of the following: 100% of the lot purchase amount, 7.5% of the total hard construction costs excluding builder profit or $20,000. The borrower will be responsible for funding the remaining amount required to reach the 10% down payment to meet construction lending requirements.

  • The construction loan cannot exceed 90% of construction costs excluding builder profit.

  • The construction loan must close within four months of the Rural Lot Purchase loan.

  • The Rural Lot Purchase Loan will be made to the borrower in the form of a second mortgage on the speculative home as well as personal guarantees. The loan will be fully payable at the time the house is sold.

  • A fee of $250 will be paid to IFA at the closing of the Rural Lot Purchase Loan.

  • The Rural Lot Purchase Loan will have a 0% interest rate for 18 months with no payments due unless the home is sold at which time the loan will be repaid in full.

  • After 18 months the IFA loan will have an interest rate of WSJ Prime Rate with quarterly principal and interest payments fully amortized over 2 years. Borrower can prepay at any time.

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