North Dakota Housing Finance Agency’s Construction Loan Guarantee program supports the speculative development or rehab of single-family homes in the state’s rural communities.
“Building homes in rural communities poses many challenges,” said Jennifer Henderson, NDHFA planning and housing development director. “The pool of potential buyers is smaller making construction lending much riskier and the cost of constructing a home is often higher than what the home will sell for in the current market. Guarantees reduce the potential loss to the lender while helping a community expand its housing stock.”
Through the program, NDHFA will guarantee the lesser of 50 percent of the construction loan made to the individual contractor or $93,500. At any given time, only three active guarantees are allowed per contractor and five per community. The lender or contractor must demonstrate that a need exists in the community for the housing and that the local governing body supports the development.
Use of the Construction Loan Guarantee program is limited to the financing of projects in communities with a population of less than 35,000.
Since the program’s inception in 2007, NDHFA has issued 46 guarantees totaling $2.75 million which have leveraged more than $7.2 million in development costs in the communities of Belfield, Carrington, Hazen, Northwood, Saint John and Tioga.