USDA Section 502 Direct Home Loan Program (Arkansas)

What is USDA Section 502 Direct Home Loan Program (Arkansas)?

USDA Section 502 Direct Home Loan Program (Arkansas) is a first mortgage for homebuyers in Statewide, Arkansas, administered by USDA Rural Development - Rural Housing Service.

• The Section 502 Direct Loan Program helps low- and very-low-income applicants obtain decent, safe, and sanitary housing in eligible rural areas of Arkansas through a direct USDA mortgage with payment assistance subsidy that increases repayment ability. No down payment is typically required and the effective interest rate can be reduced to as low as 1% through payment assistance. Loans are originated and serviced directly by USDA Rural Development through local field offices.
• No down payment typically required.
• Effective rate as low as 1% with payment assistance.
• Terms up to 33-38 years.
• Direct USDA financing for very-low- and low-income rural buyers.
• This is a federal program, so it is available beyond a single state or city.
• Funding comes from USDA Rural Development direct loan funds (Housing Act of 1949, Section 502; 7 CFR Part 3550).

Do you have to pay it back?

USDA Section 502 Direct Home Loan Program (Arkansas) is a first mortgage and is repaid under the terms set by USDA Rural Development - Rural Housing Service.

• Repayment is triggered by Payment subsidy (subsidy recapture) repaid in whole or part when title transfers or the borrower no longer occupies the dwelling.
• 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.

Who qualifies?

USDA Section 502 Direct Home Loan Program (Arkansas) is open to buyers who will live in the home as their primary residence.

What are the income limits?

USDA Section 502 Direct Home Loan Program (Arkansas) limits household income to 80% of the area median income, which varies by county and household size.

• Applicant adjusted income must be at or below the applicable low-income limit for the area (low- and very-low-income applicants); county-specific - verify on the USDA income eligibility site.
• The limit applies to total household income, not only the borrower’s.
• Area median income figures are published by HUD and updated annually, so check the current table for the county before relying on a number.

What kind of home can it be used for?

USDA Section 502 Direct Home Loan Program (Arkansas) caps the purchase price as follows: Property market value may not exceed the applicable USDA area loan limit for the county.

• New construction is eligible.

Where does it apply?

USDA Section 502 Direct Home Loan Program (Arkansas) is a federal program, so it is not limited to Arkansas.

• The program targets specific areas: Property must be located in a USDA-designated eligible rural area (verify via the USDA Eligibility site).

How do you apply?

Applications for USDA Section 502 Direct Home Loan Program (Arkansas) go through USDA Rural Development - Rural Housing Service, which publishes the current terms and the application steps on its own site.

1. 1

   Contact USDA Rural Development - Rural Housing Service to reserve funds

   Funds are reserved through Applications accepted year-round through local Arkansas RD field offices; processing depends on funding availability, and are subject to availability.

2. 2

   Work with a lender who handles the program

   Hey Prescott is not a lender and does not accept applications; this page describes the program so a buyer can take it to a lender or housing counselor.