Rural Housing Repair and
Rehabilitation Loans are loans funded directly by the Government. These
loans are available to very low-income rural residents who own and occupy a
dwelling in need of repairs. Funds are available for repairs to improve or
modernize a home, or to remove health and safety hazards. This loan is a 1%
loan that may be repaid over a 20-year period.
The Very Low-Income Housing Repair program provides loans and grants to very
low-income homeowners to repair, improve, or modernize their dwellings or to
remove health and safety hazards.
To obtain a loan, homeowner-occupants must be unable to obtain affordable
credit elsewhere and must have very low incomes, defined as below 50 percent
of the area median income. They must need to make repairs and improvements
to make the dwelling more safe and sanitary or to remove health and safety
hazards. Grants are only available to homeowners who are 62 years old or
older and cannot repay a Section 504 loan.
Loans of up to $20,000 and grants of up to $7,500 are available. Loans are
for up to 20 years at 1 percent interest. A real estate mortgage and full
title services are required for loans of $7,500 or more. Grants may be
recaptured if the property is sold in less than 3 years. Grant funds may be
used only to pay for repairs and improvements resulting in the removal of
health and safety hazards. A grant/loan combination is made if the applicant
can repay part of the cost. Loans and grants can be combined for up to
$27,500 in assistance.
Repaired properties do not need to meet other HCFP code requirements, but the
installation of water and waste systems and related fixtures must meet local
health department requirements. Water supply and sewage disposal systems
should normally meet HCFP requirements. Not all the health and safety hazards
in a home must be removed with Section 504 funds, provided that major health
and safety hazards are removed. All work must meet local codes and
Rural Development should make a decision on a complete application within 30
to 60 days.
CFR Part 3550 and HB1-3550