Link to News Release Announcing the Pilot Program Expansion


Current Section 502 Direct and Guaranteed loan borrowers may be eligible to refinance their existing mortgage loans into new Guaranteed loans through the Rural Refinance Pilot program. In addition to the original 19 states that were eligible for the pilot program, 16 additional states identified by the National Rural Housing Coalition as containing a very high proportion of persistent poor counties are now eligible.


  • Be a current Section 502 Direct or Guaranteed loan borrower
  • Meet the applicable adjusted income eligibility limit Reside in an eligible rural area, or an area that was eligible at the time of original loan closing
  • Have made timely mortgage payments for the previous 12 months at the time of loan application


  • The new interest rate fixed and a minimum of 100 basis points (1%) lower than the current interest rate
  • The new loan term must be 30 years
  • Borrowers may be added to the new loan. Original borrowers may not be removed unless they are deceased.
  • The new loan amount may include the principal loan balance, accrued interest, eligible loan closing costs, pre-paids, lender fees, escrow account establishment, and the applicable upfront guarantee fee.
  • Direct loan borrowers that owe subsidy recapture must pay the balance due or subordinate the balance.
  • The applicable annual fee applies.
  • No cash out is allowed.
  • A new appraisal, credit report, HUD Handbook determinations and additional property inspections are not required. However a new appraisal will be required for Direct loan borrowers that received subsidy in order to calculate subsidy recapture. Many lenders will order a credit report in order to verify the mortgage payment history. Rural Development does not require lenders to consider any credit criteria other than the mortgage payment history.


Applicants may apply with an approved lender of their choice that participates in the Rural Refinance Pilot Program. 

Rural Development Guaranteed Loan Coordinator Contacts may be found on this Refinance Fact Sheet.