Applications for this program are originated in the field office serving your county. Select the Contacts tab above for the NC field office list.
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.
- 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?
The maximum loan amount an applicant may qualify for will depend on the applicant’s repayment ability. The applicant’s ability to repay a loan considers various factors such as income, debts, assets and the amount of payment assistance applicants may be eligible to receive. Regardless of repayment ability, applicants may never borrow more than the Area's Loan Limits (plus certain costs allowed to be financed) 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?
- The Housing Act of 1949 as amended, 7 CFR, Part 3550,
- HB-1-3550 - Direct Single Family Housing Loans Field Office Handbook
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
• Form RD 3550-23, Applicant Orientation Guide - English version
• Form RD 3550-23, Applicant Orientation Guide - Spanish version
• Rural Development State Office Contact Information
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
• Webinar Training: Role of the intermediary and handout
• Webinar Training: How to become an intermediary and handout
• Intermediary MOU template (revision date December 11, 2017)
• Stacking order checklist
• Upcoming loan application packaging training:
• (SAVE the DATE)
by HAC in Washington, DC
Effective July 1, 2018, the current interest rate for Single Family Housing Direct Home Loans is 3.75% for low and very low income borrowers.
ASHEVILLE AREA OFFICE
Pam Hysong, Area Director
84 Coxe Avenue, Suite 1E
Asheville, NC 28801
Counties Served: Buncombe, Henderson, Transylvania
JEFFERSON SUB AREA OFFICE
134 Government Circle
Jefferson, NC 28640
Counties Served: Ashe, Watauga, Alleghany, Wilkes, Caldwell
FRANKLIN LOCAL OFFICE
195 Thomas Heights Rod
Franklin, NC 28734
Counties Served: Macon, Haywood, Jackson, Cherokee, Clay, Graham, Swain
MURPHY LOCAL OFFICE
225 Valley River Avenue, Suite J
Murphy, NC 28906
SPRUCE PINE LOCAL OFFICE
11943 S. 226 Hwy Suite D
Spruce Pine, NC 28777
Counties Served: Mitchell, Yancey, Madison, Avery
SHELBY AREA OFFICE
Warren C. Smith, Area Director
844 Wallace Grove Road
Shelby, NC 28150
Counties Served: Cleveland, Gaston, McDowell, Polk, Rutherford, Mecklenburg
WINSTON SALEM SUB AREA OFFICE
Forsyth County Agriculture Building
1450 Fairchild Drive
Winston Salem, NC 27105
Counties Served: Forsyth, Alexander, Burke, Davie
STATESVILLE LOCAL OFFICE
444 Bristol Drive
Statesville, NC 28677
Counties Served: Iredell, Catawba, Lincoln
DOBSON LOCAL OFFICE
220 Cooper Street
PO Box 66
Dobson, NC 27017
Counties Served: Surry, Yadkin, Stokes
LUMBERTON AREA OFFICE
Rossie Bullock, Area Director
PO Box 7426
440-C Caton Road
Lumberton, NC 28360
Counties Served: Robeson, Bladen, Cumberland, Scotland, Hoke, Columbus
SMITHFIELD SUB AREA OFFICE
Johnston County Agric Service Bldg
2736 Hwy 210
Smithfield, NC 27577
Counties Served: Johnston, Harnett, Sampson, Wake, Wilson
BOLIVIA LOCAL OFFICE
10 Referendum Drive
PO Box 108
Bolivia, NC 28422
Counties Served: Brunswick, New Hanover, Pender
ASHEBORO AREA OFFICE
Allen Hart, Area Director
847 Curry Drive, Suite 104
Asheboro, NC 27205
Counties Served: Guilford, Randolph, Davidson, Rowan, Stanly, Cabarrus, Rockingham, Caswell, Alamance
SANFORD LOCAL AREA OFFICE
2416 Tramway Road
Ernest & Ruby McSwain Extension Educ & Ag Center
Sanford, NC 27332
Counties Served: Lee, Chatham, Moore
ROCKINGHAM LOCAL OFFICE
123 Caroline Street
Rockingham, NC 28379
Counties Served: Richmond, Montgomery, Anson, Union
HENDERSON AREA OFFICE
George Vital, Area Director
853 S. Beckford Drive, Suite A
Henderson, NC 27536
Counties Served: Vance, Granville, Franklin, Warren, Orange, Durham, Person, Nash, Northampton, Edgecombe
WINTON SUB AREA OFFICE
County Office Building
305 W. Tryon Street
PO Box 8
Winton, NC 27986
Counties Served: Hertford, Gates, Chowan, Pasquotank, Perquimans, Camden, Currituck
HALIFAX LOCAL OFFICE
Halifax County Agriculture Complex
359 Ferrell Lane
Halifax, NC 27839
Counties Served: Halifax
KINSTON AREA OFFICE
Aaron Gaskins, Area Director
2044-C Hwy 11/55 South
PO Box 6189
Kinston, NC 28501-0189
Counties Served: Lenoir, Jones, Craven, Pamlico, Onslow, Carteret, Wayne, Greene, Duplin
GREENVILLE SUB AREA OFFICE
Pitt County Office Complex
403 Government Circle, Suite 3
Greenville, NC 27834
Counties Served: Pitt, Martin, Bertie, Washington, Tyrrell, Dare, Beaufort, Hyde