USDA Rural Development Section 502 Direct Loan Program (Colorado)

What is USDA Rural Development Section 502 Direct Loan Program (Colorado)?

USDA Rural Development Section 502 Direct Loan Program (Colorado) is a first mortgage for homebuyers in Rural Colorado County, Colorado.

• USDA Section 502 Direct Loans provide 100% financing (no down payment) with payment assistance subsidies for very-low to low-income homebuyers in eligible rural areas of Colorado. Direct government loan administered by USDA Rural Development Colorado State Office.
• 100% financing — no down payment required.
• payment assistance reduces effective interest rate.
• for very-low to low-income rural buyers.
• available in eligible rural areas statewide.
• subsidized interest rate.
• This is a federal program, so it is available beyond a single state or city.
• Funding comes from Federal.

Do you have to pay it back?

USDA Rural Development Section 502 Direct Loan Program (Colorado) is a first mortgage and is repaid under the terms set by the administering agency.

• Repayment is triggered by Sale, Refinance, and Recapture.
• The assistance is recorded in 1st Lien (USDA direct) 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 Rural Development Section 502 Direct Loan Program (Colorado) is open to first-time homebuyers and buyers who will live in the home as their primary residence.

What are the income limits?

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

• Income at or below 80% AMI; rural area income limits vary; very-low income receives payment subsidy.
• 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 Rural Development Section 502 Direct Loan Program (Colorado) caps the purchase price as follows: Must meet USDA rural area definition; maximum loan based on area limits.

• Eligible property types include Single Family, Condo, and Townhouse.
• New construction is eligible.
• Manufactured homes are not eligible.

Where does it apply?

USDA Rural Development Section 502 Direct Loan Program (Colorado) is a federal program, so it is not limited to Colorado.

• The program targets specific areas: USDA-eligible rural areas of Colorado (outside Tier 1 metros).

How do you apply?

Applications for USDA Rural Development Section 502 Direct Loan Program (Colorado) go through the administering agency, which publishes the current terms and the application steps on its own site.

1. 1

   Take a homebuyer education course

   Required by the program, through Homebuyer education may be required.

2. 2

   Contact the administering agency to reserve funds

   Funds are reserved through First-Come-First-Served, and are subject to availability.

3. 3

   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.