Section 502 Direct Single Family Housing
Loan Program
The Section 502 Direct Loan Program provides low and very low
income people the opportunity to acquire, build, rehabilitate,
or improve single family dwellings in rural areas. Under this
program, borrowers 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 New York State.
Please note that applicants my be eligible for adjustments in
annual income. Contact your local
Rural Development office for more details.
Section 502 Guaranteed Single Family Housing Loan Program
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 people 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 100% 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 New York
State. Please note that applicants may be eligible for
adjustments in annual income. Contact your local
Rural Development Office
for more details.
Section 504 Home Repair Loan and Grant Programs
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.
Section 523 Mutual Self Help Housing Program
Many rural families have achieved the
American Dream of owning their own home through USDA Rural
Development’s 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 costs 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 fulfill 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.
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