Rural Rental Housing Loans

To provide economically designed and constructed rental and cooperative housing and related facilities suited for rural residents.

credit: Wikipedia

Agency - Department of Agriculture

Established in 1862, the Department of Agriculture serves all Americans through anti-hunger efforts, stewardship of nearly 200 million acres of national forest and rangelands, and through product safety and conservation efforts. The USDA opens markets for American farmers and ranchers and provides food for needy people around the world.

Office - See Regional Agency Offices.

Refer to the NOSA which lists Offices to contact or consult your local telephone directory for Rural Development county or district office number.

If no listing, get in touch with appropriate Rural Development State office listed in Appendix IV of the Catalog or on the internet at
Website Address

Relevant Nonprofit Program Categories

Program Accomplishments

Not Applicable.

Uses and Use Restrictions

Loans can be used to construct, or to purchase and substantially rehabilitate rental or cooperative housing or to develop manufactured housing projects.

Housing as a general rule will consist of multi-units with two or more family units and any appropriately related facilities.

Funds may also be used to provide approved recreational and service facilities appropriate for use in connection with the housing and to buy and improve the land on which the buildings are to be located.

Loans may not be made for nursing, special care, or institutional-type homes.

Grants are in the form of rental assistance for some units within the underwritten property.

The term for an initial Section 515 loan is 30 years with a 50-year amortization period.

However, the term for subsequent loans and loans for special types of properties, such as manufactured housing, may be made for a shorter term based on the project?s expected useful life.

Each loan is made at a note rate established by the Agency as prescribed in RD Instruction 440.1.

Borrowers approved for initial and/or subsequent loans receive interest credit, which reduces the effective interest rate for the Agency's financing, thereby lowering the property's rents.

In return for this below-market rate financing, the borrower agrees to lease the project?s rental units to income-eligible households at rents approved by the Agency.

Borrowers operate on a nonprofit or limited-profit basis.

Eligibility Requirements

Applicant Eligibility

Applicants may be individuals, cooperatives, nonprofit organizations, State or local public agencies, profit corporations, trusts, partnerships, limited partnerships, and be unable to finance the housing either with their own resources or with credit obtained from private sources.

However, applicants must be able to assume the obligations of the loan, furnish adequate security, and have sufficient income for repayment.

They must also have the ability and intention of maintaining and operating the housing for purposes for which the loan is made.

Loans may be made in communities up to 10,000 people in MSA areas and some communities up to 20,000 population in non- MSA areas.

Applicants in towns of 10,000 to 20,000 should check with their local Rural Development; office to determine if the agency can serve them.

Assistance is available to eligible applicants in States, Puerto Rico, the Virgin Islands, Guam, American Samoa, the Northern Mariana's, and the Trust Territory of the Pacific Islands.

Beneficiary Eligibility

Occupants must be very low-, low- or moderate-income families households, elderly, handicapped, or disabled persons.


Applicants must furnish evidence of the following: (a) A comprehensive market analysis showing the need for such service; (b) a legal capacity to incur the obligation and operate the housing; (c) a sound budget; (d) good credit history; (e) inability to obtain necessary funds from other sources on terms and conditions that would enable the applicants to rent the units for amounts that are within payment ability of eligible very low, low-, or moderate-income family, households, elderly, handicapped, or disabled occupants. This program is excluded from coverage under 2 CFR 200, Subpart E - Cost Principles.

Aplication and Award Process

Preapplication Coordination

Preapplication coordination is required.

An environmental impact statement is required for this program.

This program is eligible for coverage under E.O.

12372, 'Intergovernmental Review of Federal Programs.' An applicant should consult the office or official designated as the single point of contact in his or her State for more information on the process the State requires to be followed in applying for assistance, if the State has selected the program for review.

Application Procedures

2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards applies to this program. The Section 515 Program is awarded through a Notice of Solicitation of Applications (NOSA) announced in the Federal Register.

Award Procedures

Applications will be scored on the following factors: (1) the presence and extent of leveraged assistance for the units that will serve RHS income-eligible tenants at basic rents comparable to those if RHS provided full financing, computed as a percentage of the RHS total development cost. (0 to 30 points); (2) the units to be developed are in a Colonia, tribal land, EZ, EC, or REAP community, or in a place identified in the State Consolidated Plan or State Needs Assessment as a high need community for multifamily housing. ('State' refers to the State Government.) (20 points); (3) the loan request includes donated land meeting the provisions of 7 CFR section 3560.56(c)(1)(iv). (5 points); (4) in States where RHS has an on-going formal working relationship, agreement or Memorandum of Understanding (MOU) with the State to provide State resources (State funds, State RA, HOME funds, CDBG funds, or Low-Income Housing Tax Credits) for RHS proposals; or where the State provides preference or points to RHS proposals in awarding such State resources, 20 points will be provided to loan requests that include such State resources in an amount equal to at least 5 percent of the total development cost. (National office initiative) (20 points); (5) Presidentially Declared Disaster Area Pursuant to 7 CFR 3560.56(c)(1)(iii), points will be awarded if the property will be constructed or rehabilitated in a Presidentially declared disaster area in 2011. (10 points); and (6) Energy Initiatives, Properties may receive points for energy initiatives. (0 to 42 points).


Contact the headquarters or regional office, as appropriate, for application deadlines.


Housing Act of 1949, as amended, Section 515 and 521, Public Law 102-550, 42 U.S.C. 1485, 1490a.

Range of Approval/Disapproval Time

Within 30 days, States will review and score the applications and submit a list of applications in rank and point score order to the National Office. Following the State's submission of applications to the National Office, within 30 days the National Office will rank applications on a nation-wide basis and advise States of the results.


Applicant may request reconsideration on the basis of pertinent facts concerning the application.


Applicants may reapply at the next Notice of Solicitation of Applications (NOSA).

Assistance Considerations

Formula and Matching Requirements

This program has no statutory formula. Matching requirements are not applicable to this program. MOE requirements are not applicable to this program.

Length and Time Phasing of Assistance

Loans are for up to 30 years at an effective 1 percent interest rate, and are amortized over 50 years. A current rate is used for the promissory note but thereafter is used only to determine maximum rent payments. Tenants pay basic rent or 30 percent of adjusted income, whichever is greater. RHS rental assistance subsidy can be used to limit tenant payment to 30 percent of their income. Loans made through contracts entered into on or after December 15, 1989 cannot be prepaid. Method of awarding/releasing assistance: lump sum.

Post Assistance Requirements


Program reports are not applicable.

Cash reports are not applicable.

Monthly progress reports are to be made to the Rural Development Manager, during the first six months of successful operation and each month thereafter until discontinued by the Rural Development Manager.

Annual reports required thereafter.

Expenditure reports are not applicable.

Annual reports required.


In accordance with the provisions of 2 CFR 200, Subpart F - Audit Requirements, non-Federal entities that expend financial assistance of $750,000 or more in Federal awards will have a single or a program-specific audit conducted for that year. Non-Federal entities that expend less than $750,000 a year in Federal awards are exempt from Federal audit requirements for that year, except as noted in 2 CFR 200.503.


Good business records required.

Financial Information

Account Identification

12-4141-0-3-371; 12-2081-0-1-371.


(Direct Loans) FY 16 $33,000,000; FY 17 est $28,000,000; and FY 18 est $0

Range and Average of Financial Assistance

No Data Available.

Regulations, Guidelines, and Literature

Not Applicable.

Information Contacts

Regional or Local Office

See Regional Agency Offices. Refer to the NOSA which lists Offices to contact or consult your local telephone directory for Rural Development county or district office number. If no listing, get in touch with appropriate Rural Development State office listed in Appendix IV of the Catalog or on the internet at

Headquarters Office

Director, Multi-Family Housing Processing Division, Rural Development Department of Agriculture, Washington, District of Columbia 20250 Phone: (202) 720-1604.

Criteria for Selecting Proposals

Not Applicable.

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