USDA Single Family Housing Direct Home Loans (Section 502 Direct) - Arizona

What is USDA Single Family Housing Direct Home Loans (Section 502 Direct) - Arizona?

USDA Single Family Housing Direct Home Loans (Section 502 Direct) - Arizona is a first mortgage for homebuyers in Arizona, administered by USDA Rural Development, Rural Housing Service - Arizona State Office.

• The USDA Section 502 Direct Home Loan Program helps low- and very-low-income applicants in eligible rural areas of Arizona obtain decent, safe and sanitary housing by lending directly to borrowers and providing payment assistance (a temporary interest subsidy) to increase repayment ability. Loans typically require no down payment and can fund purchase, construction, repair, renovation or relocation of a home, including site costs and water/sewer facilities. With payment assistance the effective interest rate can be reduced to as low as 1%. The program is open year-round through the Arizona State Office and local Rural Development offices.
• Funding comes from Federal appropriations - USDA Rural Housing Service direct loan funds (Housing Act of 1949, Section 502; 7 CFR Part 3550).

Do you have to pay it back?

USDA Single Family Housing Direct Home Loans (Section 502 Direct) - Arizona is a first mortgage and is repaid under the terms set by USDA Rural Development, Rural Housing Service - Arizona State Office.

• Repayment is triggered by Payment-assistance subsidy is recaptured (all or a portion) when the title transfers or the borrower no longer lives in the dwelling.
• The assistance is recorded in First lien (direct mortgage from USDA) 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 Single Family Housing Direct Home Loans (Section 502 Direct) - Arizona is open to buyers who will live in the home as their primary residence.

What are the income limits?

USDA Single Family Housing Direct Home Loans (Section 502 Direct) - Arizona limits household income to 80% of the area median income, which varies by county and household size.

• Adjusted household income must be at or below the applicable low-income (or very-low-income) limit for the county; limits vary by Arizona county per the USDA Direct Loan income limit map. Very-low-income borrowers may qualify for a 38-year term.
• 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 Single Family Housing Direct Home Loans (Section 502 Direct) - Arizona caps the purchase price as follows: Property market value may not exceed the applicable USDA area loan limit for the county where the property is located.

• Eligible property types include Single-family detached and Modest single-family home in eligible rural area.
• New construction is eligible.
• Manufactured homes are eligible.

Where does it apply?

USDA Single Family Housing Direct Home Loans (Section 502 Direct) - Arizona serves buyers purchasing anywhere in Arizona.

• The program targets specific areas: Available only in USDA-designated eligible rural areas of Arizona.

How do you apply?

Applications for USDA Single Family Housing Direct Home Loans (Section 502 Direct) - Arizona go through USDA Rural Development, Rural Housing Service - Arizona State Office, which publishes the current terms and the application steps on its own site.

1. 1

   Contact USDA Rural Development, Rural Housing Service - Arizona State Office to reserve funds

   Funds are reserved through Applications accepted on an ongoing basis October 1 - September 30 through local Rural Development offices; processing depends on funding availability and demand., 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.