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Content provided by the Catalog of Federal Domestic Assistance
10.415 Rural Rental Housing Loans




Housing Act of 1949, as amended, Sections 515 and 521, Public Law 102-550, 42 U.S.C. 1485, 1490a.
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To provide economically designed and constructed rental and cooperative housing and related facilities suited for rural residents.


Direct Loans.
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Loans can be used to construct, or to purchase and substantially rehabilitate rental or cooperative housing or to develop manufactured housing projects. Housing as a general rule will consist of multi-units with two or more family units and any appropriately related facilities. Funds may also be used to provide approved recreational and service facilities appropriate for use in connection with the housing and to buy and improve the land on which the buildings are to be located. Loans may not be made for nursing, special care, or institutional-type homes.)


Applicant Eligibility:   Applicants may be individuals, cooperatives, nonprofit organizations, State or local public agencies, profit corporations, trusts, partnerships, limited partnerships, and be unable to finance the housing either with their own resources or with credit obtained from private sources. However, applicants must be able to assume the obligations of the loan, furnish adequate security, and have sufficient income for repayment. They must also have the ability and intention of maintaining and operating the housing for purposes for which the loan is made. Loans may be made in communities up to 10,000 people in MSA areas and some communities up to 20,000 population in non- MSA areas. Applicants in towns of 10,000 to 20,000 should check with their local Rural Development; office to determine if the agency can serve them. Assistance is available to eligible applicants in States, Puerto Rico, the Virgin Islands, Guam, American Samoa, the Northern Mariana's, and the Trust Territory of the Pacific Islands.)

Beneficiary Eligibility:   Occupants must be very low-, low- or moderate-income families households, elderly, handicapped, or disabled persons.

Credentials/Documentation:   Applicants must furnish evidence of the following: (a) A comprehensive market analysis showing the need for such service; (b) a legal capacity to incur the obligation and operate the housing; (c) a sound budget; (d) good credit history; (e) inability to obtain necessary funds from other sources on terms and conditions that would enable the applicants to rent the units for amounts that are within payment ability of eligible very low, low-, or moderate-income family, households, elderly, handicapped, or disabled occupants. This program is excluded from coverage under OMB Circular No. A-87.

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Pre-application Coordination:   Not applicable. This program is excluded from coverage under E.O. 12372.

Application Procedure:   For FY 01 the Section 515 Program will be awarded through a Notice of Funding Availability (NOFA) announced in the Federal Register December 26, 2000. The NOFA application period is 90 days from the date of the announcement. The NOFA deadline is March 26, 2001.

Award Procedure:   Applications will be scored on the following factors (the factors are the same as last year's except for the additional requirement (shown in italics) that has been added to factor 4, the National Office initiative): (1) The presence and extent of leveraged assistance for the units that will serve RHS income-eligible tenants at basic rents comparable to those if RHS provided full financing, computed as a percentage of the RHS total development cost. (0 to 20 points); (2) the units to be developed are in a colonia, tribal land, EZ, EC, or REAP community, or in a place identified in the State Consolidated Plan or State Needs Assessment as a high need community for multifamily housing. ("State" refers to the State Government.) (20 points); (3) the loan request includes donated land meeting the provisions of 7 CFR 1944.215(r)(4). (5 points); and (4) in States where RHS has an on-going formal working relationship, agreement or Memorandum of Understanding (MOU) with the State to provide State resources (State funds, State RA, HOME funds, CDBG funds, or Low-Income Housing Tax Credits) for RHS proposals; or where the State provides preference or points to RHS proposals in awarding such State resources, 20 points will be provided to loan requests that include such State resources in an amount equal to at least 5 percent of the total development cost. (National office initiative) (20 points).

Deadlines:   March 26, 2001.

Range of Approval/Disapproval Time:   Within 30 days, States will review and score the applications and submit a list of applications in rank and point score order to the National Office. Following the State's submission of applications to the National Office, within 30 days the National Office will rank applications on a nation-wide basis and advise States of the results.

Appeals:   Applicant may request reconsideration on the basis of pertinent facts concerning the application.

Renewals:   Applicants may reapply at next Notice of Funding Availability (NOFA).


Formula and Matching Requirements:   This program is now a Notice of Funding Availability (NOFA). Rural Development State Directors use needs criteria to establish a list of targeted communities for which applicants may request loan funds. Applications are then rated competitively in order to select recipients.

Length and Time Phasing of Assistance:   Loans are for up to 30 years at an effective 1 percent interest rate, and are amortized over 50 years. A current rate is used for the promissory not but thereafter is used only to determine maximum rent payments. Tenants pay basic rent or 30 percent of adjusted income, whichever is greater. RHS rental assistance subsidy can be used to limit tenant payment to 30 percent of their income. Loans made through contracts entered into on or after December 15, 1989 cannot be prepaid.


Reports:   Monthly progress reports are to be made to the Rural Development Manager, during the first six months of successful operation and each month thereafter until discontinued by the Rural Development Manager. Annual reports required thereafter.

Audits:   For borrowers not covered under OMB Circular No. A-133, annual audits conducted in accordance with Government Auditing Standards are required from borrowers with 25 or more units in any project. In accordance with the provisions of 7 CFR Part 3052, "Audits of States, Local Governments, and Non-Profit Organizations," which implement OMB Circular No. A-133 (Revised, June 24, 1997), "Audits of States, Local Governments, and Non-Profit Organizations," nonfederal entities that receive financial assistance of $300,000 or more in Federal awards will have a single or a program-specific audit conducted for that year. Nonfederal entities that expend less than $300,000 a year in Federal awards are exempt from Federal audit requirements for that year, except as noted in 7 CFR 3052.

Records:   Good business records required.


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

Obligations:   (New Construction funds) FY 01 $50,100,000; FY 02 est $49,000,000; and FY 03 est $49,000,000.

Range and Average of Financial Assistance:  
No Data Available.

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In fiscal year 2001, development of estimated 1,626 housing units were provided and 4,990 units were rehabilitated.


RD Instruction 1944-E, "Rural Rental Housing Loan Policies Procedures, and Authorizations;" 7 CFR 1944.201-1944.250; 1822.231-1822.244; Rural Rental Housing, PA-1399, and Congregate Housing Financed by RD, PA-1252.


Regional or Local Office:   See Regional Agency Offices. Refer to the NOSA which lists Offices to contact or consult your local telephone directory for Rural Development county or district office number. If no listing, get in touch with appropriate Rural Development State office listed in Appendix IV of the Catalog or on the internet at

Headquarters Office:   Director, Multi-Family Housing Processing Division, Rural Housing Service, Department of Agriculture, Washington, DC 20250. Telephone: (202) 720-1604. Use the same number for FTS.

Web Site Address:


Not applicable.


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