(a) Interest rate. The loan must be written at an interest rate that:
(1) Is fixed over the term of the loan;
(2) Shall be negotiated between the lender and borrower to allow the borrower to obtain the best available rate available;
(3) Does not exceed the greater of the Fannie Mae or Freddie Mac rate for 30 year fixed rate conventional loans, as authorized in Exhibit B of subpart A of part 1810 of this chapter (RD Instruction 440.1, available in any Rural Development office) or online at: http://www.rurdev.usda.gov/rd--instructions.html and
(4) If the interest rate increases between the time of the issuance of the conditional commitment and the loan closing, the lender will note the change in the loan closing package and submit appropriate updated documentation and underwriting analysis to confirm that the applicant is still eligible.
(b) Repayment period. The term of the loan may not exceed 30 years. Adjustable rate mortgages, balloon term mortgages or mortgages requiring prepayment penalties are ineligible terms.
(c) Repayment schedule. Amortized payments will be due and payable monthly.
(d) Negative amortization. The loan note must not provide for interest on interest.