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USDA Rural Development Section 502 Direct Loan Program (Kansas)

USDA Rural Development, Kansas State Office · Rural Kansas – eligible rural areas only, Kansas

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Income limit

80% AMI

Of area median income; varies by county and household size

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

USDA Rural Development Section 502 Direct Loan Program (Kansas) is a first mortgage for homebuyers in Rural Kansas – eligible rural areas only, Kansas, administered by USDA Rural Development, Kansas State Office.

  • The USDA Section 502 Direct Loan Program provides financing to low- and very-low-income applicants for purchase, construction, repair, or renovation of homes in eligible rural areas of Kansas. The program offers a fixed-rate mortgage with payment assistance that can reduce the effective interest rate to as low as 1%, and requires no down payment. Applications are accepted year-round through local USDA Rural Development offices.
  • No down payment required.
  • Fixed interest rate (5.125% as of June 2026, reducible to 1% with payment assistance).
  • Up to 38-year term.
  • Available for purchase, construction, or renovation.
  • No prepayment penalty.
  • This is a federal program, so it is available beyond a single state or city.
  • Funding comes from USDA Housing Act of 1949, Section 502; federal appropriations.

Do you have to pay it back?

USDA Rural Development Section 502 Direct Loan Program (Kansas) is a first mortgage and is repaid under the terms set by USDA Rural Development, Kansas State Office.

  • Repayment is triggered by Borrowers must repay all or portion of payment subsidy received over life of loan when title transfers or borrower no longer occupies the dwelling.
  • The assistance is recorded in First mortgage 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 (Kansas) is open to buyers who will live in the home as their primary residence.

The program requires

  • The home is occupied as a primary residence
  • On credit: No specified minimum FICO; must demonstrate willingness and ability to repay. See USDA credit requirements document.
  • Citizenship or immigration status: U.S. citizen or eligible non-citizen. Must not be debarred or suspended from federal programs.
  • DRAFT (dpa-gap-finder 2026-06-13): pending review. Applicant must be without decent housing and unable to obtain financing elsewhere. Property must be in USDA-eligible rural area (check eligibility.sc.egov.usda.gov). Interest rate of 5.125% effective June 1, 2026 (verified from USDA Kansas state page). Payment subsidy recapture applies. Federal program — eligible_veteran and other special populations set false because program does not give enhanced terms to these groups specifically.

The program excludes

  • Households above 80% of area median income

These are the program's own published rules, not a decision about any individual — the administering agency and a lender determine who actually qualifies.

What are the income limits?

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

  • Must be at or below the applicable low-income limit for the area (county-specific; generally at or below 80% AMI for 'low income' or lower for 'very low income'). See USDA income eligibility map at rd.usda.gov for Kansas county-specific limits.
  • 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 (Kansas) caps the purchase price as follows: Home must not exceed the applicable area loan limit per county (see USDA area loan limit map).

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

Where does it apply?

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

How do you apply?

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

  1. Contact USDA Rural Development, Kansas State Office to reserve funds

    Funds are reserved with the provider and are subject to availability.

  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.

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