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USDA Rural Home Loans and Repair Grants: 502 vs. 504
USDA has three main rural home paths. A Section 502 Direct or Guaranteed loan can help buy a home. A Section 504 loan or grant can help an eligible owner repair a home.
The home must be in an eligible rural area. Check the address first. “Rural” can include some small towns near a city.
What is a Section 502 Direct loan?
USDA lends the money in the Direct program. It serves some people with low or very low income who cannot get fair credit in another way.
The home must be your main home. It must be modest, safe, and in an eligible area. Payment help may lower the bill for a time.
The rate and payment depend on the loan and your case. Ask the local Rural Development office for a full cost sheet.
What is a Section 502 Guaranteed loan?
A private lender makes this loan. USDA backs part of it. A household may earn up to 115% of the area median income under the main rule.
The program may offer a no-down-payment loan. You still may have closing costs, a guarantee fee, taxes, insurance, and repair needs.
Shop more than one approved lender. USDA does not set every lender fee or rate.
What is a Section 504 repair loan?
Section 504 may lend up to $40,000 to an owner with very low income. The loan has a 1% rate and can last up to 20 years.
The money can repair a safety or health problem or make a home safer to use. The owner must live in the home and be unable to get fair credit in another way.
A local USDA worker will check the home, income, credit path, and repair plan. The top amount is not promised.
Who can get a Section 504 grant?
A grant is only for an eligible owner age 62 or older who cannot repay a repair loan. It must remove a health or safety risk.
The normal grant limit is $10,000. It can be up to $15,000 in a presidential disaster area under the current rule. A loan and grant can be joined, with limits of $50,000 or $55,000 in that disaster case.
A grant may have to be paid back if the home is sold within three years. Ask USDA to put the terms in writing.
How do you check the address and income?
Use USDA's property and income tool. Pick the right program before you search.
A map result is a first check, not final approval. Household size, county, income, debt, the home, and the loan path still matter.
For Section 504, compare your facts with the very-low-income limit. Our housing income tool can give local context, but USDA makes its own choice.
What should a repair applicant gather?
- ID and Social Security numbers
- Proof of income and bank funds
- Proof you own and live in the home
- Debt and housing bills
- Photos and repair bids
- Tax and home insurance records
USDA lists Forms RD 410-4, 3550-1, and 3550-4 in its Section 504 materials. A state office may need more items. Ask for the current packet before you send private records.
How do you apply?
- Check the address on USDA's site.
- Call the local Rural Development office.
- Ask which 502 or 504 path fits the goal.
- Get the current forms and document list.
- Send the free application and save a copy.
Section 504 is open year-round while money is available. Read our full Section 504 repair guide before you pay a contractor.
Run your numbers. The free income limit checker compares your pay to HUD's limit for your county — the number housing programs check first. Nothing you type is saved. All calculators →