What does this program do?
Also known as the Section 504 Home Repair program, this provides loans to very-low-income homeowners to repair, improve or modernize their homes or grants to elderly very-low-income homeowners to remove health and safety hazards.
For existing Section 502 direct and 504 borrowers who have received a payment moratorium related to COVID-19: The American Rescue Plan (ARP) Act of 2021 appropriated additional funds for Section 502 direct and 504 loans, to remain available until September 30, 2023. The focus will be to refinance existing Section 502 direct and Section 504 borrowers who have received a payment moratorium related to COVID-19. Beginning May 17, 2021, the Agency will accept applications from existing Section 502 direct and Section 504 loan borrowers, to refinance outstanding loans which have been in an approved COVID-19 moratorium. Additional information for these borrowers, including a standardized application package, is available at https://pubmai.sc.egov.usda.gov/.
Who may apply for this program?
To qualify, you must:
- Be the homeowner and occupy the house
- Be unable to obtain affordable credit elsewhere
- Have a household income that does not exceed the very low limit by county.
- For grants, be age 62 or older and not be able to repay a repair loan
What is an eligible rural area?
Utilizing the USDA Eligibility Site you can enter a specific address for determination or just search the map to review general eligible areas.
How may funds be used?
- Loans may be used to repair, improve or modernize homes or remove health and safety hazards
- Grants must be used to remove health and safety hazards
How much money can I get?
- Maximum loan is $40,000
- Maximum grant is $10,000
- Loans and grants can be combined for up to $50,000 in assistance
What are the terms of the loan or grant?
- Loans are termed for 20 years
- Loan interest rate is fixed at 1%
- Full title service is required if the total outstanding balance on Section 504 loans is greater than $25,000
- Grants have a lifetime limit of $10,000
- Grants must be repaid if the property is sold in less than 3 years
- If applicants can repay part, but not all of the costs, applicants may be offered a loan and grant combination
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?
Approval times depend on funding availability in your area. Talk to a USDA home loan specialist in your area for help with the application
Who can answer questions and how do I get started?
Contact a USDA home loan specialist in your area
What governs this program?
- The Housing Act of 1949 as amended, 7 CFR Part 3550
- HB-1-3550 - Direct Single Family Housing Loans and Grants Field Office Handbook
Why does USDA Rural Development do this?
Helping people stay in their own home and keep it in good repair helps families and their communities. Homeownership helps families and individuals build savings over time. It strengthens communities and helps many kinds of businesses that support the local economy.
NOTE: Because citations and other information may be subject to change, please always consult the program instructions listed in the section above titled "What Governs this Program?" Applicants may also contact your local office for assistance.
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.
Applicants interested in applying for a repair loan or grant can contact their local Rural Development office and provide the following documentation:
- Form RD 410-4, Uniform Residential Loan Application
- Form RD 3550-1, Request for Information
- Form RD 3550-4, Employment and Asset Certification
- All application items listed in Attachment 12-E checklist
Rural Development Staff and Loan Application Packager Resources:
- Repair loan packagers are not subject to the certified packaging process for purchase loans. Information regarding the 504 packaging process can be found in HB-1-3550, Chapter 3, Attachment 3-A.
- Allowable packaging fees to any public, tribe or private nonprofit organizations may be included in repair loans, but not repair grants.
- The 504 Automated Worksheet is a tool designed to identify what type of assistance a homeowner may receive; however, is not a final eligibility determination. The tool can be used to package 504 loans.
- Eligibility for repair assistance considers the applicant's age, household income, and Total Debt (TD) ratio. To qualify for a grant, the applicant must be 62 or older.
- Income-Based Grant Assistance: Applicant meets the age requirement and their household income is within the grant income limit (based on county and household size).
- Ratio-Based Grant Only Assistance: Applicant meets the age requirement, their household income is within the very low income limit, and their TD ratio exceeds 46%.
- Ratio-Based Loan and Grant Combination Assistance: Applicant meets the age requirement, their household income is within the very low income limit, and their TD ratio does not exceed 46%.
- Ratio-Based Loan Assistance: No age requirement, the applicant's household income is with the very low income limit, and their TD ratio does not exceed 46%.
Individual states may have particular requirements based on state and local regulations. Please contact the state office in the state where your project is located.
There are no other additional requirements at the national level. If there are additional state-specific requirements they will be listed above.
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