RUPCO is an official packager of the USDA Rural Development 502 direct loan program. Counseling and completion of approved education is required to obtain these loans and is provided through RUPCO. Loans requirements regarding maximum loan amounts and income limits are set by county and is for eligible properties within designated rural areas.

What does this program do?
Also known as the Section 502 Direct Loan Program, this program assists low- and very-low-income applicants obtain decent, safe and sanitary housing in eligible rural areas by providing payment assistance to increase an applicant’s repayment ability. Payment assistance is a type of subsidy that reduces the mortgage payment for a short time. The amount of assistance is determined by the adjusted family income.

Who may apply for this program?
A number of factors are considered when determining an applicant’s eligibility for Single Family Direct Home Loans. At a minimum, applicants interested in obtaining a direct loan must have an adjusted income that is at or below the applicable low-income limit for the area where they wish to buy a house and they must demonstrate a willingness and ability to repay debt. Credit history and additional requirements apply.

Can a single person apply or do I need to be part of a family?
Singles, family households and unrelated partners may apply

Applicants must:

  • Be unable to obtain a loan from other resources on terms and conditions that can reasonably be expected to meet
  • Agree to occupy the property as your primary residence
  • Have the legal capacity to incur a loan obligation
  • Meet citizenship or eligible noncitizen requirements
  • Not be suspended or debarred from participation in federal program

Properties financed with direct loan funds must:

  • Generally be 2,000 square feet or less
  • Not have market value in excess of the applicable area loan limit
  • Not have in-ground swimming pools, Property size must be below 5 acres and not sub dividable
  • Not be designed for income producing activities

Borrowers are required to repay all or a portion of the payment subsidy received over the life of the loan when the title to the property transfers or the borrower is no longer living in the dwelling.

Applicants must meet income eligibility for a direct loan.

https://www.rd.usda.gov/files/RD-DirectLimitMap.pdf  

This is not the full list of requirements or conditions of the USDA 502 direct loan program. Additional information or questions can be directed to your counselor or found on the USDA website

https://www.rd.usda.gov/programs-services/single-family-housing-direct-home-loans/ny

USDA FAQ:

What is an eligible area?

Generally, rural areas with a population less than 35,000 are eligible.  Visit the USDA Income and Property Eligibility website for complete details.

https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=sfp

How may funds be used?

Loan funds may be used to help low-income individuals or households purchase homes in rural areas including closing costs. Funds can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities. Funding amount for the total loan for all purposes is based on the ability to pay. Repair loans are provided to make the home meet habitability conditions and eliminate health and safety issues and loan approval. Homes are inspected by a USDA Rural Development representative in addition will require a third party independent NYS certified home inspection report in addition to other testing where required prior to approving the home.

How much may I borrow?

The maximum loan amount an applicant may qualify for will depend on the applicant’s repayment ability. The applicant’s ability to repay a loan considers various factors such as income, debts, assets and the amount of payment assistance applicants may be eligible to receive. Regardless of repayment ability, applicants may never borrow more than the Area’s Loan Limits (plus certain costs allowed to be financed) for the county in which the property is located. https://www.rd.usda.gov/files/RD-SFHAreaLoanLimitMap.pdf

What is the interest rate and payback period?

Fixed interest rate based on current market rates at loan approval or loan closing, whichever is lower Interest rate when modified by payment assistance, can be as low as 1% Up to 33 year payback period – 38 year payback period for very low income applicants who can’t afford the 33 year loan term

How much down payment is required?

No down payment is typically required. Applicants with assets higher than the asset limits may be required to use a portion of those assets or cover costs above their approved loan amount.

Is there a deadline to apply?

Applications for this program are accepted through your local RD office year round.

How long does an application take?

Processing times vary depending on funding availability and program demand in the area in which an applicant is interested in buying and completeness of the application package.

What governs this program?

The Housing Act of 1949 as amended, 7 CFR, Part 3550,
HB-1-3550 – Direct Single Family Housing Loans Field Office Handbook

Why does USDA Rural Development do this?

USDA Rural Development’s Section 502 Direct Loan Program provides a path to homeownership for low- and very-low-income families living in rural areas, and families who truly have no other way to make affordable homeownership a reality. Providing these affordable homeownership opportunities promotes prosperity, which in turn creates thriving communities and improves the quality of life in rural areas.