Low-Income Housing Grants and Repair Loans Explained

Low-Income Housing Grants and Repair Loans Explained

Updated January 11, 2023
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Low-Income Housing Grants and Repair Loans Explained

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Do you live in a rural U.S. county in a home that could use some repairs?

If so, you may qualify for a low-cost housing repair loan or even a housing repair grant. The Rural Housing Service's Section 504 Home Repair Program offers low-income individuals and families the means to make livability and modernization repairs to their homes.

It's important to note that the grant funds provided by this housing program are meant to assist low-income families residing in rural housing. If you live in a suburban or urban area, or household is classified as moderate income or higher, you likely will not qualify.

Read on to find out what this program is, who is eligible to receive funding, how the funds can be used, and how you can apply.

What Does The Program Offer

The Very Low-Income Housing Repair Loans and Grants program, also known as the Section 504 Home Repair Program, offers low-interest loans – up to 20 years at just 1 percent interest – and grants to qualifying individuals to repair or update their home.

It's funded by the Federal Government, and is focused on rural development areas. The program allows homeowners to make emergency repairs, health and safety updates, energy-efficient upgrades, or repairs that help bring their home up to code.

It's similar to programs put in place by government agencies to help low-income households pay the costs of their energy and heating bills.

The Federally Funded program offers up to $20,000 in loans or $7,500 in grants. Loans can be used for repairs or to modernize your home, but grants can only be used to remove health and safety hazards.

Loans come with a very fair interest rate – just 1% – and are structured as home mortgages if they are over $2,500. If your loan is greater than $7,500, a full title service is required. Your loan can be repaid over 20 years.

One thing to keep in mind is that if you sell your home within three years of accepting a grant, you must repay the grant from the proceeds.

Full program information can be found on the SAM.gov website.

Program Eligibility Requirements

The basic requirements for the program are:

  • Be a U.S. Citizen or permanent resident living in a qualifying rural residence
  • Own and occupy the property in question as a primary residence
  • Inability to access other forms of credit
  • Have a family income of less than half the area median

To qualify for a grant, you must also be over 62 years of age and unable to repay a loan.

How to Apply For This Program

File your application with the Rural Development Local Government Office Manager for your state and locality. You have two options for submitting your application.

You can complete and send in the requisite forms yourself or get assistance from a 504 packager. These are non-profit organizations that can be assigned to you by the USDA.

Once you submit the required forms, a decision will be made within 30 to 60 days.

If your application is rejected, you can appeal this decision to the National Appeals Division of the USDA. They have the final say on your application.

Get the Assistance You Need

If you meet the eligibility requirements for the Section 504 Home Repair Program, you should definitely consider applying. It's a great way to bring an older home up to safety standards or even modernize an aging dwelling.

Want to learn more about available Department of Housing grant and assistance programs? Check out our full section on popular grants available for those who need them.