USDA Section 502 Direct Home Loan Program

What is USDA Section 502 Direct Home Loan Program?

USDA Section 502 Direct Home Loan Program is a first mortgage for homebuyers in Statewide, New Hampshire, administered by USDA Rural Development - Rural Housing Service.

• The USDA Section 502 Direct Home Loan Program provides direct mortgage financing to low- and very-low-income households buying a home in eligible rural areas of New Hampshire, with no down payment typically required. USDA provides payment-assistance subsidy that can reduce the effective interest rate to as low as 1%. Terms run up to 33 years (38 for qualifying very-low-income borrowers), and the subsidy is subject to recapture when the home is sold or the borrower moves out.
• No down payment typically required.
• Payment-assistance subsidy reduces effective rate to as low as 1%.
• Long repayment terms (up to 33-38 years).
• Serves low- and very-low-income rural buyers.
• Direct loan from USDA.
• This is a federal program, so it is available beyond a single state or city.
• Funding comes from USDA Rural Development direct loan funds (Housing Act of 1949; 7 CFR Part 3550).

Do you have to pay it back?

USDA Section 502 Direct Home Loan Program is a first mortgage and is repaid under the terms set by USDA Rural Development - Rural Housing Service.

• Repayment is triggered by Borrowers must repay all or a portion of the payment-subsidy received over the life of the loan when title transfers or the borrower no longer lives in the dwelling (subsidy recapture).
• 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 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 sets its income limit as follows: Applicant's adjusted income must be at or below the applicable low-income limit for the county where the home is located (limits vary by county and household size; published in the USDA Direct Loan income-limit map / Appendix 9).

• 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 caps the purchase price as follows: Property market value may not exceed the applicable USDA area loan limit for the county.

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

Where does it apply?

USDA Section 502 Direct Home Loan Program is a federal program, so it is not limited to New Hampshire.

• The program targets specific areas: Available only in USDA-designated eligible rural areas (check the USDA eligibility site by address).

How do you apply?

Applications for USDA Section 502 Direct Home Loan Program go through USDA Rural Development - Rural Housing Service, which publishes the current terms and the application steps on its own site.

1. 1

   Contact USDA Rural Development - Rural Housing Service to reserve funds

   Funds are reserved through Applications accepted year-round through the local USDA Rural Development office (NH served via the Vermont/New Hampshire State Office); processing depends on 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.