USDA Single Family Housing Guaranteed Loan Program (Section 502 Guaranteed)

USDA Single Family Housing Guaranteed Loan Program (Section 502 Guaranteed) is a first mortgage for homebuyers in Alabama, administered by USDA Rural Development, Alabama State Office. The USDA Section 502 Single Family Housing Guaranteed Loan Program provides a 90% loan note guarantee to approved private lenders, enabling low- and moderate-income households to purchase, build, or rehabilitate a home in eligible rural areas of Alabama with no money down. Applicants must not exceed 115% of area median income and must occupy the property as their primary residence. Not limited to first-time homebuyers; supports 30-year fixed-rate financing. 100% financing — no down payment required. No minimum credit score set by USDA. 90% federal loan guarantee. Closing costs, repairs, and site prep may be financed. No set purchase price limit. Not restricted to first-time homebuyers. 30-year fixed rate. Manufactured homes eligible. Funding comes from Federal — USDA Rural Housing Service; 90% loan note guarantee backed by federal government.

USDA Single Family Housing Guaranteed Loan Program (Section 502 Guaranteed) is a first mortgage and is repaid under the terms set by USDA Rural Development, Alabama State Office. The assistance is recorded in first position. Forgiveness and repayment terms are set by the program and can change — confirm them on the official program page before applying.

USDA Single Family Housing Guaranteed Loan Program (Section 502 Guaranteed) is open to homebuyers who will live in the home as their primary residence. On credit, the program states: No minimum credit score set by program; applicants must demonstrate willingness and ability to repay; lenders may set overlays. Residency requirement: Must occupy home as primary residence; property must be in eligible rural area. Citizenship or immigration status: U.S. citizen, U.S. non-citizen national, or Qualified Alien. Property must be in a USDA-eligible rural area — verify each address at eligibility.sc.egov.usda.gov. Upfront guarantee fee (currently ~1%) and annual fee (currently ~0.35%) apply in lieu of PMI — verify current rates with approved lender. Lenders may impose credit overlays. Cannot be used for income-producing properties.

USDA Single Family Housing Guaranteed Loan Program (Section 502 Guaranteed) limits household income to 115% of the area median income, which varies by county and household size. FY2025 income limits vary by Alabama MSA/county. Moderate income (115% AMI) 4-person limits: Huntsville MSA $119,850; Birmingham-Hoover HMFA $119,850; Auburn-Opelika HMFA $119,850; Decatur MSA $104,800; most other Alabama counties $119,850. 1-8 person limits in HB-1-3555 Appendix 5 (PN 645, 06/18/2025). The limit applies to total household income, not only the borrower’s. The program lists a maximum household size of 8. Area median income figures are published by HUD and updated annually, so check the current table for the county before relying on a number.

USDA Single Family Housing Guaranteed Loan Program (Section 502 Guaranteed) caps the purchase price as follows: No set maximum purchase price; loans are based on appraised value; must be modest, adequate housing. Eligible property types include Single Family, Condo, Townhouse, PUD, Modular, and Manufactured. New construction is eligible. Manufactured homes are eligible.

USDA Single Family Housing Guaranteed Loan Program (Section 502 Guaranteed) serves homebuyers purchasing anywhere in Alabama. The program targets specific areas: Only properties in USDA-designated eligible rural areas qualify; verify at eligibility.sc.egov.usda.gov; urban/suburban areas typically ineligible.

Applications for USDA Single Family Housing Guaranteed Loan Program (Section 502 Guaranteed) go through USDA Rural Development, Alabama State Office, which publishes the current terms and the application steps on its own site. Funds are reserved through Applications accepted on a continuous basis through approved lenders; no reservation required. Hey Prescott is not a lender and does not accept applications; this page describes the program so a homebuyer can take it to a lender or housing counselor.