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USDA Section 502 Direct Loan Program (Rhode Island)

USDA Rural Development, Rural Housing Service (CT/MA/RI State Office, Amherst MA; Warwick RI Area Office) · Rhode Island

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Assistance

100%

Of the purchase price, as the program sets it

What is USDA Section 502 Direct Loan Program (Rhode Island)?

USDA Section 502 Direct Loan Program (Rhode Island) is a first mortgage for homebuyers in Rhode Island, administered by USDA Rural Development, Rural Housing Service (CT/MA/RI State Office, Amherst MA; Warwick RI Area Office).

  • The USDA Section 502 Direct Loan Program assists low- and very-low-income applicants in obtaining decent, safe and sanitary housing in eligible rural areas of Rhode Island by providing direct mortgages with payment (interest) subsidy to increase repayment ability. USDA is the lender; no down payment is typically required and the effective rate can drop to as low as 1% with payment assistance. As of May 1, 2026 the note rate is 5.00% for low- and very-low-income borrowers, with terms up to 33 years (up to 38 years for very-low-income applicants who cannot afford the 33-year term).
  • Up to 100% financing, no down payment typically required.
  • Interest rate as low as 1% after payment assistance.
  • Long repayment terms (up to 33-38 years).
  • Direct USDA loan for households unable to obtain credit elsewhere.
  • Funds usable to buy, build, repair, renovate, or relocate a rural home.
  • This is a federal program, so it is available beyond a single state or city.
  • Funding comes from Direct federal appropriation; USDA is the direct lender.

How much assistance does it provide?

USDA Section 502 Direct Loan Program (Rhode Island) provides assistance worth 100% of the purchase price, as set by the program.

  • Award tiers: Low-income and very-low-income borrowers; very-low-income applicants who cannot afford a 33-year term may receive up to a 38-year term.
  • Buyer contribution: No down payment typically required.
  • Amounts are the program's published maximums, not an offer — USDA Rural Development, Rural Housing Service (CT/MA/RI State Office, Amherst MA; Warwick RI Area Office) determines any individual award.

Do you have to pay it back?

USDA Section 502 Direct Loan Program (Rhode Island) is a first mortgage and is repaid under the terms set by USDA Rural Development, Rural Housing Service (CT/MA/RI State Office, Amherst MA; Warwick RI Area Office).

  • Repayment is triggered by Payment subsidy (interest subsidy) received is subject to recapture and must be repaid (all or a portion) 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 Loan Program (Rhode Island) 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 fixed minimum credit score; applicant must demonstrate willingness and ability to repay debt
  • Residency: Property must be in an eligible USDA-defined rural area of Rhode Island (verify address via the USDA Eligibility Site) and occupied as the primary residence
  • Citizenship or immigration status: U.S. citizen or eligible noncitizen
  • DRAFT (dpa-gap-finder 2026-06-14): pending review. Property must be located in a USDA-eligible rural area (verify by address at the USDA Eligibility Site). Applicants must be without decent, safe, sanitary housing and unable to obtain other credit on reasonable terms. Subsidy recapture applies on transfer/move-out. NOTE: RI-specific income and area-loan-limit dollar figures are published via USDA interactive lookups rather than static numbers on the program page, so income_limit_amount and max_purchase_price are left null; verify per county and household size.

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 Section 502 Direct Loan Program (Rhode Island) sets its income limit as follows: Adjusted household income must be at or below the applicable low-income limit for the area (very-low and low-income tiers). RI-specific dollar limits vary by county and household size; use the USDA Income Eligibility lookup (eligibility.sc.egov.usda.gov). NOTE: RI dollar table not transcribed here because USDA publishes it via an interactive lookup rather than a static figure on the program page.

  • 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 Loan Program (Rhode Island) caps the purchase price as follows: Property market value may not exceed the applicable USDA area loan limit for the county (see RD-SFHAreaLoanLimitMap).

  • Eligible property types include single_family.
  • New construction is eligible.

Where does it apply?

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

How do you apply?

Applications for USDA Section 502 Direct Loan Program (Rhode Island) go through USDA Rural Development, Rural Housing Service (CT/MA/RI State Office, Amherst MA; Warwick RI Area Office), which publishes the current terms and the application steps on its own site.

  1. Contact USDA Rural Development, Rural Housing Service (CT/MA/RI State Office, Amherst MA; Warwick RI Area Office) to reserve funds

    Funds are reserved through Applications accepted on an ongoing basis from individuals October 1 - September 30 via the local USDA RD office; processing subject to funding availability, 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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