Section 504 Home Repair Program: USDA Repair Loans and Grants for Rural Homeowners

How the Section 504 home repair program works

The program gets its name from section 504 of the Housing Act of 1949. USDA calls it the Single Family Housing Repair Loans and Grants program. Its goal is simple: help very low-income people in rural areas keep their homes safe and livable.

There are two kinds of help. A loan can pay for general repairs and improvements, or to remove health and safety hazards, as long as the home stays modest in size and design. A grant is only for people 62 and older, and it can only pay to remove health and safety hazards or to make the home accessible for someone with a disability. Many older homeowners get a mix of both. If you can afford some monthly payment, USDA may offer a loan for part of the cost and a grant for the rest.

USDA Rural Development runs the program through local and state offices. A loan officer reviews your income, your home, and the repairs you need. You can read the official program page from USDA Rural Development, and the full rules are in 7 CFR part 3550, subpart C.

Loan and grant limits at a glance

The federal rule sets a ceiling on how high USDA can go. The loan cap cannot be more than 20% of the national average area loan limit, and the lifetime grant cap cannot be more than 10% of it. USDA then publishes the actual dollar amounts. These are the amounts USDA lists today.

Your loan can also be smaller than $40,000. USDA limits the loan to the amount your budget can repay at 1% over 20 years. As a rough guide, a $10,000 loan at 1% over 20 years works out to about $46 a month, and $40,000 is about $184 a month. Your actual payment comes from USDA, not from this estimate.

Some USDA state pages describe higher grant limits for homes in presidentially declared disaster areas. If your county had a recent federal disaster declaration, ask your local office whether a higher limit applies to you.

Eligibility rules in plain words

To qualify for the Section 504 home repair program, you must meet all of these rules:

• Own and live in the home. It must be your home, not a rental or a second home.
• Very low income. Your household's adjusted income must be at or below the very low-income limit for your county. That limit is about 50% of the area median income, and it changes by county and household size.
• No affordable credit elsewhere. You must be unable to get a loan or grant on reasonable terms from another source.
• Limited savings. Elderly households must put net family assets over $20,000 toward the repairs. Other households must use assets over $15,000. The value of your home and a basic lot are not counted.
• Citizenship. You must be a U.S. citizen or a qualified non-citizen.
• Age 62 or older for grants. Younger homeowners can get loans only.
• Repayment ability for loans. You must show a budget that can cover the payment. A cosigner or other household members can join the application if needed.

For loans, USDA also looks at credit history. Signs of trouble include recent late payments of more than 30 days, a foreclosure in the last 36 months, or an unpaid tax lien with no payment plan. A bankruptcy discharged more than 36 months ago does not count against you. If USDA turns you down for credit reasons, it must tell you why in writing.

You can check the current income limit for your county on the USDA income and property eligibility site. Choose the single family housing repair program and enter your county and household details.

Checking whether your area counts as rural

Section 504 money can only be used in rural areas that USDA has designated. Many small towns and areas outside cities qualify, but the lines are not always where people expect. The best way to check is the property eligibility map on the same USDA eligibility site. Type in your street address and the map shows whether the home is in an eligible area.

If your area changes from rural to non-rural after you already have a USDA housing loan, the rule says you may still get 504 help. If the map is unclear, call your local Rural Development office and ask them to confirm.

What the money can and cannot pay for

Common repairs include a leaking roof, a broken furnace or water heater, unsafe wiring, a failing well or septic system, broken windows, and wheelchair ramps or bathroom grab bars. Here is what the rules allow and rule out.

Mobile and manufactured homes can qualify for hazard repairs if you own both the home and the land, you lived there before applying, and the home is on a permanent foundation or will be put on one with the 504 funds. All work must meet local building codes. The home does not have to be perfect after the repairs, but it cannot still have major hazards.

Proving you own the home

Many older rural homes passed down through families do not have a clean deed. The rules allow several kinds of proof:

• A deed in your name (full ownership).
• A written lease with enough time left. Grants need at least 5 years remaining; loans need at least 2 years beyond the loan term.
• A life estate that gives you the right to live in and control the property.
• Shared (undivided) ownership, such as heirs' property, in many cases.
• A land purchase contract if you are current on payments.
• Other evidence if none of the above exists, such as tax records showing you pay the property taxes, or statements from neighbors that you have lived there as the owner for at least 10 years.

If title is complicated, a free legal aid office may be able to help you sort it out before you apply.

Mortgage, insurance, and appraisal rules for loans

Small loans come with fewer strings. As the total 504 loan grows, more rules apply:

USDA may also set up an escrow account for taxes and insurance. If you get a grant, you sign a repayment agreement instead of a mortgage. You only repay the grant if you sell the home within 3 years of signing.

Papers to gather before you apply

Having these ready can save a second trip:

• Photo ID and Social Security numbers for household members
• Proof of income for everyone in the household, such as Social Security award letters, pension statements, or pay stubs
• Recent bank statements and a list of other assets
• Your deed, lease, or other proof of ownership
• Your latest property tax bill and homeowners insurance information
• A list of the repairs you need, plus any contractor estimates you already have
• Proof of age if you are applying for a grant

How long does a 504 application take?

USDA does not publish a standard processing time. It depends on your local office's workload, how complete your application is, and how much funding is available. USDA accepts applications even when money has run out, and when funds are short, it gives priority to applications that remove health and safety hazards. Among equal applications received the same day, veterans get preference. After that, requests are funded first come, first served.

If your application is incomplete, USDA must return it and tell you in writing what is missing. USDA may also write to you to ask whether you are still interested; answer by the date given, or your application can be withdrawn. Plan for the process to take weeks to months, and apply early rather than waiting for a repair to become an emergency.

Other repair help if you do not qualify

If your area is not rural, your income is too high, or you need help faster, other options exist. The Weatherization Assistance Program fixes heating systems and drafty homes for free. Cities and counties run repair programs funded by federal block grants. Area Agencies on Aging, found through the Eldercare Locator or by calling 1-800-677-1116, can point older adults to minor repair and safety programs. Nonprofits and churches help too; see government assistance for home repairs for seniors for a full list.

How to apply, step by step

1. Check the address on the USDA property eligibility map.
2. Check the income limit for your county and household size on the same site.
3. List the repairs you need and, if you can, get one or two written estimates.
4. Contact your local USDA Rural Development office and ask for a Section 504 application. Many offices let you start by phone.
5. Turn in a complete application with income, asset, and ownership papers.
6. Answer USDA's follow-up requests quickly and keep copies of everything.
7. Use approved contractors and let USDA inspect the work before final payment.

For more options, see our guides on federal home repair grants and charities that help with home repairs.

Related guides

• Government assistance for home repairs for seniors
• Housing repair grants for low-income families
• Weatherization Assistance Program
• Grants to help the elderly

Frequently asked questions

This guide is general information. Loan and grant limits, income limits, and eligible areas can change; confirm them with your local USDA Rural Development office. National Relief Program is an independent website and is not affiliated with USDA or any government agency.