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

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

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

• Also known as the Section 502 Direct Loan Program, this USDA Rural Development program assists low- and very-low-income applicants in obtaining decent, safe and sanitary housing in eligible rural areas of Nebraska by providing direct mortgage financing with payment assistance (a subsidy that temporarily reduces the mortgage payment). No down payment is typically required, and the effective interest rate can be reduced to as low as 1% with payment assistance.
• 100% financing - no down payment typically required.
• Payment assistance subsidy reduces effective interest rate to as low as 1%.
• Fixed rate (5.125% as of June 1, 2026 before subsidy).
• Up to 33-year term (38 years for very-low-income borrowers).
• Funds may be used to buy, 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 USDA Rural Development (Housing Act of 1949; 7 CFR Part 3550).

Do you have to pay it back?

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

• Repayment is triggered by Payment subsidy (recapture) repaid when title transfers or borrower no longer occupies the dwelling.
• 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) - Nebraska 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) - Nebraska sets its income limit as follows: Adjusted household income must be at or below the applicable low-income limit for the area (USDA Direct income limits by county).

• The limit applies to total household income, not only the borrower’s.
• The program lists a maximum household size of 8.
• Area median income figures are published by HUD and updated annually, so check the current table for the county before relying on a number.

Where does it apply?

USDA Single Family Housing Direct Home Loans (Section 502 Direct) - Nebraska is a federal program, so it is not limited to Nebraska.

• The program targets specific areas: Eligible USDA-defined rural areas of Nebraska (verify via USDA eligibility site).

How do you apply?

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

1. 1

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

   Funds are reserved with the provider 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.