Home State Money Federal Money Private Money Low Cost Colleges EducationMoney Store
Link to Us
The FAFSA application is provided to you by the U.S. Department of Education (DOE) and is ALWAYS free!

Select a Category
Animal Conservation
Arts & Humanities
Child Services
Employment and Labor
Immigration & Refugees
Native Americans
Science & Medical Research
Youth At Risk
How to Apply for Federal Assistance
Writing a Winning Grant Proposal
Understanding the Federal Program Descriptions

Content provided by the Catalog of Federal Domestic Assistance
10.410 Very Low to Moderate Income Housing Loans




Housing Act of 1949, Title V, Section 502, as amended, Public Law 89-117, 42 U.S.C. 1471 et seq.; Public Law 92-310, 42 U.S.C. 1480, 42 U.S.C. 1472; Public Law 98-51; Public Law 100-233; Amendment of Consolidated Farm and Rural Development Act of 1987, Section 601.
OBJECTIVES: Click here for help!
To assist very low, low-income, and moderate-income households to obtain modest, decent, safe, and sanitary housing for use as a permanent residence in rural areas.


Direct Loans.
Place Cursor Here for Definition
Guaranteed/Insured Loans.
Place Cursor Here for Definition


Loans and loan guaranteed may be used to buy, build, or improve the applicant's permanent residence. Funds may be used for certain improvements to the dwelling. Manufactured homes may be financed when they are newly on a permanent site, purchased from an approved dealer or contractor, and meet certain other requirements. Under special circumstances, homes may be re-financed. Dwellings financed must be modest, decent, safe, and provide sanitary housing. The cost of a home financed with a direct loan is limited to the most current amount authorized by the Agency. The property must be located in an eligible rural area. Assistance is available in the States, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, the Commonwealth of Northern Mariana's, and the Trust Territories of the Pacific Islands. Direct loans are made at the interest rate(s) specified in RD Instruction 440.1, Exhibit B (available in any Rural Development local office) for the type of assistance involved, and are repaid over an amortization period of up to 33 years for regular loans and 38 years for loans to applicants whose adjusted annual income do not exceed 60 percent of the area median income, if necessary to show repayment ability. Payment assistance is granted annually on direct loans which could reduce the monthly installment on the note to an amount equal to what it would be if the note were amortized to as low as one percent, depending on the loan amount, the size and income of the family. Payment assistance is subject to recapture by the government when the customer no longer resides in the dwelling. There is no funding provided for deferred mortgage authority or loans for deferred mortgage assumptions. Loans may be made to refinance either existing RHS Guaranteed Housing loans or RHS Section 502 Direct Housing loans. Guaranteed loans are amortized over 30 years. The interest rate is negotiated with the lender.


Applicant Eligibility:   Applicants must have very low, low or moderate incomes. Very low income is defined as below 50 percent of the area median income (AMI); low income is between 50 and 80 percent of AMI. Moderate income is below 115 percent of AMI. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance. Qualifying ratios range from 29 percent for PITI to 41 percent for total debt. In addition, applicants must be unable to obtain credit elsewhere, yet have reasonable credit histories.

Beneficiary Eligibility:   Applicants and borrowers must meet applicant eligibility requirements.

Credentials/Documentation:   Applicants may need to submit evidence of inability to obtain credit elsewhere, verification of income and debts, plans, specifications, and cost estimates. This program is excluded from coverage under OMB Circular No. A-87.

back to top
Pre-application Coordination:   None. This program is excluded from coverage under OMB Circular No. A-102 and E.O. 12372.

Application Procedure:   For direct loans, applicants must file loan applications at the Rural Development field office serving the county where the dwelling is or will be located. For guaranteed loans, applicants must contact a local lender. This program is excluded from coverage under OMB Circular No. A-110.

Award Procedure:   Local field offices generally have the authority to approve most Section 502 loan requests. Requests for guarantee are handled differently in each State. Contact your Rural Development State Office, listed in the telephone directory. If no backlog exists, decisions on direct applications should be made within 30 to 60 days of receipt of the application. Request for guarantees are generally acted upon within 1 to 2 days.

Deadlines:   None.

Range of Approval/Disapproval Time:   For direct loans from 30 to 60 days subject to availability of funds, from the time the application is filed if no backlog of applications exists. For guarantees generally within 1 to 2 days.

Appeals:   Agency regulations providing customers with the rights for an informal review, mediation or alternative dispute resolution (ADR), or appeal to the National Appeals Division (NAD) are contained in 7 CFR Part 3550. NAD regulations are found at 7 CFR Part 11. Requests for an informal review, mediation and ADR must be received within 30 days from the date of the adverse decision. Requests for an appeal to NAD must be received within 30 days of receipt of the adverse decision.

Renewals:   Applicants may reapply at any time.


Formula and Matching Requirements:   This program has no matching requirements. This program has no statutory formula. A basic formula is used to allocate program funds to various States. The criteria used in the basic formula include the States percentage of the National: Number of rural occupied substandard units, rural population, rural population in places of less than 2500 population, number of rural households between 50 and 80 percent of the area median income, and number of rural households below 50 percent of the area median income. The data source for each of these criteria is based on the latest census data available.

Length and Time Phasing of Assistance:   This assistance is available throughout the year by means of quarterly allocations of funds to District offices. Funds may be disbursed at loan closing or deposited in a supervised bank account for purchase of a building site, and purchase or repair of a dwelling, or in multiple advances for construction. For guaranteed loans, funds are disbursed after all work is complete. Applications for direct loans far exceed available funding. There is generally a waiting list for direct loan funding.


Reports:   Borrowers receiving a payment subsidy must submit verification of household income annually for recalculation of benefits.

Audits:   None.

Records:   Borrowers are not required to, but should retain copies of loan-related documents.


Account Identification:   12-4141-0-3-371; 12-2081-0-1-371.

Obligations:   (Direct Loans) FY 01 $1,106,424,000; FY 02 est $1,076,998,750; and FY 03 est $1,076,998,750. (Guaranteed loans) FY 01 $2,150,599,000; FY 02 est $3,136,429,000; and FY 03 est $3,136,429,000.

Range and Average of Financial Assistance:  

FY 13 Average: 502 Direct Loans ($118,122), Guaranteed Loans ($137,381)
FY 14 Average: 502 Direct Loans ($121,479), Guaranteed Loans ($136,828)
FY 15 Average: 502 Direct Loans ($125,226), Guaranteed Loans ($136,360)
FY 16 Avergae: 502 Direct Loans ($125,348), Guranteedd Loans ($136,986)
Average loan amounts for FY 15 and FY 16 are estimates.
Loans in high cost areas may be higher.

back to top
In fiscal year 2001, 17,681 new direct loans and 29,123 guaranteed loans were made.


7 CFR Part 3550 "Direct Single Family Housing Loans and Grants." For guaranteed loans, 1980-D "Subpart D -Rural Housing Loans."


Regional or Local Office:   See Regional Agency Offices. Consult your local telephone directory under U.S. Department of Agriculture for a Rural Development field office listing or visit the website for a State Office listing.

Headquarters Office:   Myron L. Wooden, 1400 Independence Avenue, SW, Washington, District of Columbia 20250 Email: Phone: (804) 287-1559

Web Site Address:


Not applicable.


Not applicable.

Click here for some free tips!

Select a Program Category:

State Money | Federal Money | Private Money | Low Cost Colleges |
Home | How to Apply for Federal Assistance | Writing a Winning Grant Proposal |
Understanding the Federal Program Descriptions