Inside this article
Owning a home is a goal for many, but the reality of maintaining it can involve significant financial hurdles. This is especially true for those in rural areas, where accessing affordable financing for home improvements can be challenging.
To address this issue, the United States Department of Agriculture (USDA) offers a range of programs to assist eligible homeowners in repairing and improving their homes. Among these is the Section 504 Home Repair Program: a valuable resource for eligible borrowers seeking to enhance their living conditions.
USDA Section 504 Home Repair Program
The USDA's Section 504 Home Repair Program, also known as the Single-Family Housing Repair Loans & Grants program, is designed to aid eligible USDA borrowers in making essential home repairs and improvements.
The program’s primary goal is to help individuals and families remain in their homes while building up savings over time. Not only does it strengthen communities, but it also supports local economies by preserving the value and functionality of rural housing. The program is also dedicated to addressing low-quality housing, which is disproportionately prevalent in rural areas compared to the national average.
The Section 504 Home Repair Program is particularly directed toward elderly homeowners and low-income households. By targeting these demographics, the USDA aims to alleviate financial barriers that often prevent rural homeowners from accessing funds for home repairs and improvements.
USDA Home Repair and Improvement Loans
The USDA Home Repair Program offers loans to very-low-income homeowners for the purpose of repairing, improving or modernizing their homes. The USDA defines “very low income” as households falling below 50% of the local median household income.
One of the most attractive features of this initiative is its emphasis on affordability. These loans come with a 20-year term and carry a fixed 1% interest rate, making them a viable option for those who might otherwise struggle to secure affordable financing.
Maximum Section 504 Loan Amount
Under the USDA Home Repair and Improvement program, homeowners can access loans of up to $40,000. However, the program mandates a full title service for loans exceeding $25,000.
USDA Home Repair and Improvement Grants
The USDA Section 504 Home Repair Program also provides grants to elderly homeowners to remove health and safety hazards from their residences. These grants offer a direct means of addressing critical issues that could endanger the well-being of elderly residents. This funding is reserved for rural homeowners aged 62 and older.
Maximum Section 504 Grant Amount
The maximum grant amount available through the USDA home repair program is $10,000. However, this amount must be repaid if the homeowner sells the property within 3 years of receiving the grant.
USDA Requirements for Home Repairs and Improvements
To qualify for the USDA Section 504 Home Repair Program, potential borrowers must:
- Be the owner and primary occupant of the home
- Demonstrate an inability to obtain affordable financing from other sources
- For loans, have a household income that falls within the "very low" category based on their county's median area income
- For grants, be aged 62 or older to be considered "elderly"
Properties must be located in designated rural areas to qualify for the program. In some cases, borrowers may be eligible to combine funding from a home repair loan and grant, offering a maximum total of $50,000 toward improving the property.
Some states might have additional requirements based on state and local regulations. Homeowners interested in this program should reach out to their state's Rural Development Office for state-specific information.
How to Apply for a USDA Home Repair Loan or Grant
Applying for the USDA Section 504 Home Repair Program begins at your local Rural Development office. Some of the required documents for your application include:
- Form RD 410-4: Uniform Residential Loan Application
- Form RD 3550-1: Request for Information
- Form RD 3550-4: Employment and Asset Certification
Your approval timeline will depend on the availability of funding in your area, but applications are accepted year-round as long as funds are available. Approval is generally on a first-come, first-served basis. For more information on the application process, contact a USDA lender in your area.