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Housing: USDA Rural Development Rural Housing Programs


There are a number of different housing programs to assist lower income individuals and families, who do not have adequate housing. The programs are only available in rural areas, usually in towns of up to 10,000 population. USDA Rural Development can help people afford suitable apartments or to buy, repair, or build their own homes.

The Rural Rental Program (section 515) finances apartments for lower income people who may not otherwise be able to afford decent housing. Most tenants in these apartments pay no more than one-third of their income in rent. The government provides the finances to developers, non-profit organizations or others to construct apartments under this program. They receive favorable interest rates on their loans and certain tax breaks as incentives to maintain or increase the supply of adorable housing in rural areas. A similar program is available to build Farm Labor Housing. Home repair funds are also available through the Housing Preservation Grant program. Grants are made to non-profit organizations and public bodies who in turn make funds available to homeowners who cannot afford to make needed repairs. Those interested in either of these programs should contact Debra Eason at (302) 857-3615 or E-Mail:

The direct Single-Family Home Loan Program sometimes referred to as “Section 502,” involved a low interest loan directly from the agency to a prospective homeowner who cannot afford regular mortgages but can afford to repay a low interest loan on a “modest” home. The interest rate depends on the income and size of the family and can be as low as 1 percent. There is no down payment required. To qualify, the family’s income has to be below certain limits which are different depending on where you live. Your local Rural Development Office can tell you what the limits are in your area. (For office contact information see the Area/Sub Area Offices section.)

Sometimes a direct 502 loan is combined with a loan from a bank or mortgage company to make funds available to a prospective homeowner. These loans are referred to as leveraged loans. The total mortgage is more affordable to homeowners because one of the loans is subsidized by the government. Since Rural Development is only funding part of the mortgage, it can stretch its scarce resources farther to help other families.

Leveraged loans benefit private sector lenders because they get first lien position so their chance of loss is very small. Leveraged loans can be sold to Fannie Mae or others in the secondary market. Lenders also earn valuable Community Reinvestment Act (CRA) credits by participating in the leveraged loan program.

There is also a guaranteed Single-Family Home Loan program to help low and moderate income people qualify for a mortgage loan from a bank or mortgage company. The Federal Government guarantees the lender up to 90 percent of the loan against losses if there is a default on the loan. Lenders are more likely to approve a loan if it is guaranteed against losses. Also the lender may make these loans available with no down payment. The person receiving guaranteed loans apply directly to the bank or mortgage company, not with the agency.

Lenders can sell the guaranteed portion of the loans on the secondary market. There are many additional benefits to lenders including CRA credits. Lenders interested in this program should contact: Stacey Slacum at (302) 857-3600 or E-Mail

The Self-Help Loan Program assists groups of six to eight families or individuals who want to build their own homes with professional supervision. The loan qualification are the same as the regular direct single family housing program above but the participants have to attend more meetings and spend their free time working on their new homes. All the participants work on each others houses and the homes are all built at the same time. There is no down payment for these loans and because of savings in labor costs, the overall mortgage is lower. For information please contact the Area/Sub Area Office near you or the State Office listed in this homepage.

A Home Repair loan and grant program (Section 504) is available to lower income people who would rather stay in their present home but can’t afford needed repairs. The government can make repair loans up to $20,000 at a 1 percent interest rate. Grants up to $7,500 can be made to persons 62 years of age and older. (For office contact information please see Area/Sub-Area Office section.)

For more information visit the Rural Development website

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