USDA Section 502 Direct Home Loan Program (Delaware)

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

USDA Section 502 Direct Home Loan Program (Delaware) is a first mortgage for homebuyers in Delaware, administered by USDA Rural Development – Rural Housing Service (Delaware/Maryland State Office).

• The USDA Section 502 Direct Home Loan Program provides direct mortgage financing from USDA Rural Development to low- and very-low-income households buying a home in eligible rural areas of Delaware. Payment assistance is a temporary interest subsidy that can reduce the effective interest rate to as low as 1%, with no down payment typically required and terms up to 33 (or 38) years. The interest subsidy is subject to recapture when the home is sold or no longer occupied by the borrower.
• No down payment typically required.
• Effective interest rate as low as 1% with payment assistance.
• Up to 33-year (38-year for very-low-income) repayment term.
• Direct USDA financing for rural low-income buyers.
• Funds can build, repair, renovate or relocate a home.
• This is a federal program, so it is available beyond a single state or city.
• Funding comes from Federal direct loan funds appropriated to USDA Rural Development under Section 502 of the Housing Act of 1949 (7 CFR Part 3550).

Do you have to pay it back?

USDA Section 502 Direct Home Loan Program (Delaware) is a first mortgage and is repaid under the terms set by USDA Rural Development – Rural Housing Service (Delaware/Maryland State Office).

• Repayment is triggered by Borrowers must repay all or a portion of the payment-subsidy received over the life of the loan (subsidy recapture) 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 (Delaware) 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 (Delaware) sets its income limit as follows: Adjusted household income must be at or below the applicable very-low-income or low-income limit for the county where the home is located (per the USDA Direct income-limit tables / 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 (Delaware) caps the purchase price as follows: Property market value cannot exceed the applicable USDA area loan limit for the county.

• Eligible property types include Single Family.
• New construction is eligible.
• Manufactured homes are eligible.

Where does it apply?

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

How do you apply?

Applications for USDA Section 502 Direct Home Loan Program (Delaware) go through USDA Rural Development – Rural Housing Service (Delaware/Maryland State Office), which publishes the current terms and the application steps on its own site.

1. 1

   Contact USDA Rural Development – Rural Housing Service (Delaware/Maryland State Office) to reserve funds

   Funds are reserved through Applications accepted on an ongoing basis year-round (Oct 1 – Sep 30) through the local Delaware Rural Development office; processing times vary with 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.