502 Direct Loans

The Section 502 Direct Loan Program provides low- and very-low income families the opportunity to acquire, build, rehabilitate, or improve single family dwellings in rural areas. Under this program, applicants receive a loan directly from USDA Rural Development. The standard term for a Section 502 loan is 33 years. However, loans may be made for a shorter term, and in some cases for 38 years. Each loan is made at a fixed rate established by the Agency and payment subsidies are available to many (income eligible) borrowers to reduce monthly loan payments.

Click here to view income limits for areas in Virginia. Please note that applicants may be eligible for adjustments in annual income. Contact your local Rural Development office for more details. 

502 Guaranteed Loans

If your income is too high to qualify for a Section 502 Direct Single Family Housing Loan, you may qualify for a Section 502 Guaranteed Housing Loan.  These are loans made by participating lenders, such as banks or credit unions.  USDA Rural Development issues a loan note guaranteed to the lender, which enables them to make loans to families that they would otherwise be unable to serve. 

These loans are made at a fixed rate of interest for 30 years and there is no limit on seller concessions.  The lender may loan up to 102% of the appraised value; therefore, closing costs and repairs can often be included in the loan.  Private mortgage insurance (PMI) is not required, but a small one time guaranteed fee is required at closing.  Click here to view income limits for areas in Virginia.  Please note that applicants may be eligible for adjustments in annual income. 

GRH Tools and Lender Information

Rural Development Offices in Virginia

504 Loans and Grants

Section 504 loans and grants are available to very low income homeowners in rural areas to repair their single family homes.  Loan funds may be used to make general repairs and improvements, or remodel dwellings to make them accessible for individuals with disabilities.  Applicants may obtain multiple Section 504 loans, but the sum of the outstanding balance on all Section 504 loans cannot exceed $20,000.  Loans have a maximum term of 20 years and a fixed interest rate of 1 percent. 

For very-low income homeowners 62 years old and older who cannot afford a loan to make necessary repairs, grant funds are available. Grants may be used to remove health or safety hazards, or to remodel dwellings to make them accessible to household members with disabilities.  Grants are limited to lifetime assistance of $7,500. 

Applications may be obtained through your local Rural Development Office.

Rural Housing Site Loans

These loans are used to buy and develop building sites, including the construction of access roads, streets, and utilities. The sites must be developed on a nonprofit basis for low and moderate income families. The sale of the lots developed with Section 523 funds is limited to mutual self-help participants. Sites developed with Section 524 funds must be for housing for low- and moderate-income families. The sites may be sold to families, nonprofit organizations, public agencies, and cooperatives eligible for assistance under any Section of Title V of the Housing Act of 1949, as amended, or any other law which provides financial assistance for housing for low income families.

Public or private nonprofit organizations may apply.

Self-Help Housing Loans

Many rural families have achieved the American Dream of owning their own home through USDA Rural Developments Mutual Self-Help Housing Program.  Under this program, households provide a substantial portion of the labor involved in building their own homes. This sweat equity contribution reduces the total cost of purchasing a home and provides the family with immediate equity in their home.    

The families supply the necessary labor while obtaining a Section 502 Single Family Housing Loan to purchase land, materials and to subcontract work on very technical items.  A private or public nonprofit corporation (including Native American Indian tribes and tribal corporations) or a public body obtains a Section 523 Mutual Self Help Technical Assistance Grant to provide the training, homeownership education, construction supervision and guidance needed to complete the goals of the self-help housing program.  The participating families, nonprofits and Rural Development all work together to provide housing for a group of families in need.

Self-Help Technical Assistance Grants

The Technical Assistance Grant is funded directly by the Government. These grants provide financial assistance to non-profit organizations who will provide technical assistance to low- and very low-income households to build their own homes in a rural area. Funds may be used to pay salaries, rent, and office expenses of the non-profit organization.

Loans are Available for:

• New and Existing Site-Built Homes

• New and Existing Modular Homes

• New and Existing Condominium Units

• New Manufactured Homes that are set up by an approved Dealer/Contractor

Prohibited Features:

• In-Ground Swimming Pool

• Income-Producing Buildings/Land

Single Family Housing Links