Program 101

Program Status: Open
Program Factsheet: PDF

What does this program do? 
Also known as the Section 502 Direct Loan Program, this program assists low- and very-low-income applicants obtain decent, safe and sanitary housing in eligible rural areas by providing payment assistance to increase an applicant’s repayment ability. Payment assistance is a type of subsidy that reduces the mortgage payment for a short time. The amount of assistance is determined by the adjusted family income.

Who may apply for this program?
A number of factors are considered when determining an applicant’s eligibility for Single Family Direct Home Loans. At a minimum, applicants interested in obtaining a direct loan must have an adjusted income that is at or below the applicable low-income limit for the area where they wish to buy a house and they must demonstrate a willingness and ability to repay debt.

Applicants must:

  • Be without decent, safe and sanitary housing
  • Be unable to obtain a loan from other resources on terms and conditions that can reasonably be expected to meet
  • Agree to occupy the property as your primary residence
  • Have the legal capacity to incur a loan obligation
  • Meet citizenship or eligible noncitizen requirements
  • Not be suspended or debarred from participation in federal programs

Properties financed with direct loan funds must:

  • Generally be 2,000 square feet or less
  • Not have market value in excess of the applicable area loan limit
  • Not have in-ground swimming pools
  • Not be designed for income producing activities

Borrowers are required to repay all or a portion of the payment subsidy received over the life of the loan when the title to the property transfers or the borrower is no longer living in the dwelling.

Applicants must meet income eligibility for a direct loan.  Please select your state from the dropdown menu above.

What is an eligible area?
Generally, rural areas with a population less than 35,000 are eligible.  Visit the USDA Income and Property Eligibility website for complete details.

How may funds be used?
Loan funds may be used to help low-income individuals or households purchase homes in rural areas. Funds can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities.

How much may I borrow?

Using the Single Family Housing Direct Eligibility Assessment tool, potential applicants may enter information online to determine if the Section 502 Direct Loan Program is a good fit for them prior to applying.  The tool will provide a preliminary eligibility determination after a potential applicant enters information on their general household composition, monthly income, monthly debts, property location, estimated property taxes, and estimated hazard insurance.  Potential applicants are welcome to submit a complete application for an official determination by USDA Rural Development (RD) regardless of the eligibility assessment results.  Upon receipt of a complete application, RD will determine the applicant’s eligibility using verified information and the applicant’s maximum loan amount based on their repayment ability and the area loan limit for the county in which the property is located. 

What is the interest rate and payback period?

  • Fixed interest rate based on current market rates at loan approval or loan closing, whichever is lower
  • Interest rate when modified by payment assistance, can be as low as 1%
  • Up to 33 year payback period - 38 year payback period for very low income applicants who can’t afford the 33 year loan term

How much down payment is required?
No down payment is typically required. Applicants with assets higher than the asset limits may be required to use a portion of those assets.

Is there a deadline to apply?
Applications for this program are accepted through your local RD office year round.

How long does an application take?
Processing times vary depending on funding availability and program demand in the area in which an applicant is interested in buying and completeness of the application package.

What governs this program?

Why does USDA Rural Development do this?
USDA Rural Development’s Section 502 Direct Loan Program provides a path to homeownership for low- and very-low-income families living in rural areas, and families who truly have no other way to make affordable homeownership a reality. Providing these affordable homeownership opportunities promotes prosperity, which in turn creates thriving communities and improves the quality of life in rural areas.

NOTE: Because citations and other information may be subject to change please always consult the program instructions listed in the section above titled "What Law Governs this Program?" You may also contact your local office for assistance.

Forms & Resources

NOTE:  Please select your state using the "Select your location" menu above.  By doing so, any state specific forms and resources will be shown above this note. Please visit the Eligibility Site to find out if your income is within the direct loan limits.  Also, the home to be built or purchased must be located in an eligible rural area.
 
Applicant Resources:
 

Borrower Resources:

Customer Service Guide - English version
Customer Service Guide - Spanish version
Streamlined Assist Refinance Loan

Training Webinars and Handouts:

Program overview and handout
Pre-qualification and application processes and handout
Determining annual, adjusted, and repayment income and handout
Worksheet for computing income & max loan amount calculator
   • June 13, 2018 version of the worksheet
Credit requirements and handout
eForms electronic application process, handout, and user guide

Certified Loan Application Packager Resources:
 
Packagers are encouraged to routinely visit the Direct Loan Application Packagers page for information and resources specific to packaging single family housing direct loans.

Interest Rates

Effective November 1, 2018, the current interest rate for Single Family Housing Direct Home Loans is 3.50% for low and very low income borrowers.

Contacts

State Office:

Main Phone Number: (530) 792-5800 extension 1

USDA Rural Development
Attn: Single Family Housing
430 G St, Agency 4169
Davis, CA 95616

Ron Tackett, California Single Family Housing Program Director
(530) 792-5816

Debbie Morris, SFH Specialist
(530) 792-5820

Nancy Larson, SFH Specialist
(530) 792-5808

Tamye Binning, SFH Technician
(530) 792-5823

Kallii Lane, SFH Technician
(530) 792-5802

Local Offices

Auburn Office: Serving Alpine, Calaveras, El Dorado, Mono, Nevada, Placer and Sierra Counties
Robert Canepa, Area Specialist
(530) 217-6252

Bakersfield Office: Serving Inyo, Kern, Santa Barbara and Ventura Counties
Roberto Palomino, Area Specialist
(661) 281-2737

Armando Aparicio, Area Specialist
(661) 281-2743

Eureka Office: Serving Del Norte and Humboldt Counties
Zachary Frater, Area Specialist
(707) 443-5578

Fresno Office: Serving Fresno County
Liz Vannata, Area Specialist
(559) 490-8030

Alba Lazaro, Area Specialist
(559) 490-8028

Imperial Office: Serving Imperial and San Diego Counties
Patty Coronado, Area Specialist
(760) 355-2208 ext. 109

Indio Office: Serving Los Angeles, Orange, Riverside and San Bernadino Counties
Maggie Slater, Area Specialist
(760) 347-3675 ext. 122

Teon Gore, Area Specialist
(760) 347-3675 ext. 121

Latasha Kendrix, Area Specialist
(951) 902-6564

Maria Elena Desamito, Area Specialist
(760) 347-3675 ext. 126

Merced Office: Serving Madera, Mariposa, Merced, San Joaquin, Stanislaus and Tuolumne Counties
Alma Jaquez, Area Specialist
(209) 205-4970

Oroville Office: Serving Amador, Butte, Colusa, Sacramento, Solano, Sutter, Yolo and Yuba Counties
Darunee Kent, Area Specialist
(530) 693-3178

Nicole Roldan-Leben, Area Specialist
(530) 693-3162

Frances Parker, Area Technician
(530) 693-3153 

Redding Office: Serving Glenn, Lassen, Plumas, Shasta, Tehama and Trinity Counties
Cheri Skudlarek, Area Specialist
(530) 226-2588

Salinas Office: Serving Alameda, Monterey, San Benito, San Francisco, San Mateo, Santa Clara and Santa Cruz Counties
Mark Hultgren, Area Specialist
(831) 975-7737

Lupe Benavides, Area Specialist
(831) 975-7738

Santa Rosa Office: Serving Contra Costa, Lake, Marin, Mendocino, Napa, and Sonoma Counties
Estella Apalatequi, Area Specialist
707-536-0249

Visalia Office: Serving Kings, San Luis Obispo and Tulare
Stacy Lopez, Area Specialist
(559) 754-3154

Rebecca Didway, Area Specialist
(559) 754-3158

Yreka Office: Serving Modoc and Siskiyou Counties
Dale Stretz, Area Specialist
(530) 572-3129