The Rural Housing Service wants to help low- and very low-income applicants who do not qualify for the Section 502 Guaranteed Loan Program by advising them about the Section 502 Direct Loan Program.

These applicants generally demonstrate a willingness and ability to pay their debt obligations but lack sufficient repayment ability for a guaranteed loan.  The Section 502 Direct Loan Program, which is a subsidized mortgage program, may enhance an applicant’s purchasing power.

Direct loans are made directly by USDA, Rural Development and are available to households whose adjusted income does not exceed 80 percent of the area median.  Eligible applicants can obtain modest and affordable housing by taking advantage of the direct program:

  • No down payment requirement.
  • Fixed promissory note interest rate that considers the Treasury benchmark interest rate.  (The rate in effect for March of 2015 is 3.00 percent.)
  • Payment assistance that reduces the borrower’s mortgage payments to an effective interest rate as low as one percent.
  • Standard loan term of 33 years. 

We ask that you encourage these applicants to contact their local Rural Development office to learn more about the direct program and obtain an application for assistance.

Section 502 Direct Loan Program Information

502 Direct Loans: Best-kept Rural Housing Secret

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