USDA Rural Development Section 504 loans and/or grants are available to assist eligible, very low income, homeowners with repair of their home, located in rural areas. Repairs may be made to improve or modernize the home, to make it safe, sanitary, or to remove health and safety hazards. Grants are only available for repairs that remove health or safety hazards.
Loan And Grant Purposes
Section 504 grant funs may be used only to pay costs for repairs and improvements which will remove identified health or safety hazards. Loan funds may be used to improve or modernize dwellings regardless of the removal of health or safety hazards. Dwellings repaired with loan or grant funds need not be brought to agency development standards or thermal performance standards, nor must all of the existing hazards be removed provided the dwelling does not continue to have major health or safety hazards after the planned repairs are made.
Authorized loan and grant purposes include but are not limited to the following:
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Installation or repair of sanitary disposal systems, together with related plumbing and fixtures, which will meet local health department requirements. |
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Payment of reasonable connection fees, which may include assessments for utilities (i.e. water, sewer, electricity or gas) which are required to be paid by the applicant and which cannot be paid from other funds. |
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Energy conservation measures such as: |
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- Insulation.
- Combination screen-storm windows and doors.
- Repair or replacement of heating system.
- Electrical wiring.
- Repair or replacement of roof.
- Replacement of deteriorated siding.
- Payment of incidental expenses such as surveys, title clearance, loan closing and architectural or other technical services.
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Maximum Loan or Grant
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Maximum assistance outstanding to any individual for initial or subsequent Section 504 loans may not exceed $20,000. |
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Lifetime assistance to any individual for initial or subsequent Section 504 grants may not exceed a cumulative total of $7,500. |
Limitation On Use Of Loan/Grant Funds
Section 504 loan or grant funs may not be used to:
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Assist in the construction of a new dwelling. |
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Make repairs to a dwelling of such poor condition that when the repairs are completed, the dwelling will continue to be a major hazard to the safety and health of the occupants. |
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Move a mobile/manufactured home from one site to another. |
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Refinance any debt or obligation of the borrower/grantee. |
Limitation On Use Of Grant Funds
In addition, Section 504 grant funds may not be used to make changes to the dwelling for cosmetic or convenience purposes, unless the work is directly related to the removal of hazards. Cosmetic and convenience changes may include, but are not limited to:
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Painting. |
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Paneling. |
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Carpeting. |
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Improving clothes closets or shelving. |
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Improving kitchen cabinets. |
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Air conditioning. |
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Landscape plantings. |
Eligibility Requirements
Section 504 applicants must meet the following requirements:
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A citizen of the United States. |
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Posses legal capacity to incur the loan obligation. |
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Owner and occupant of the dwelling to be repaired. |
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Have an adjusted annual income that does not exceed the "very low income" limit as set by USDA Rural Development. |
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Have a favorable credit history. |
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Be unable to obtain the needed credit from other sources. |
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Be unable to remove the safety or health hazards by utilizing personal resources. |
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Have adequate repayment ability. |
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For a Section 504 grant only: |
- At least 62 years of age.
- Lack repayment ability for a loan.
Evidence Of Ownership
Applicants must submit evidence of ownership of property to be improved.Rates And Terms
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The interest rate for all Section 504 loans is one (1) percent per annum. |
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Loan terms will not exceed 20 years and should be based on the borrower’s repayment ability. |
Application
Application for Section 504 assistance will be made on Form RD 410-4, "Application for Rural Assistance (non-farm tract) Uniform Residential Loan Application," which are available at local USDA Rural Development offices.Family Budget
Form RD 1944-3, "Budget and/or Financial Statement", will be prepared by all Section 504 applicants. When determining repayment ability, the budget will consider and account for items such as:
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Non-cash benefits (food stamps, scholarships, free clothing, meals on wheels, free transportation, etc.) which help reduce the applicant’s budgeted expenses. |
Credit Investigation
Credit reports, at no expense to the applicant, are required for loans exceeding $7,500.Verification Of Income
Income from employment will be verified by use of FormRD 1910-5, "Request of Verification of Employment". Social Security (SS), Supplemental Security Income (SSI), social services, pension and other similar sources are included as income. Cost Estimates
Written cost estimates will be required for all work to be performed.U.S. Department of Agriculture. |
