Section 502 Loan

Section 502 loans are a rural housing loan program administered by the rural housing service rhs authorized under section 502 of the housing act of 1949.

Section 502 loan. Also known as the section 502 direct loan program this program assists low and very low income applicants obtain decent safe and sanitary housing in eligible rural areas by providing payment assistance to increase an applicant s repayment ability. On average section 502 loans costs 3 000 over its entire lifetime. Over 12 500 loan applications amounting to 1 5 billion are typically on section 502 waiting lists.

Applicants must meet certain criteria to qualify for a usda rural development section 502 loan. Loans are made directly by rhs 7 cfr 3550 or by private lenders with a usda guarantee 7 cfr 1980. The section 502 guaranteed rural housing loan program is designed to serve rural residents who have a steady low or modest income and yet are unable to obtain adequate housing through conventional financing.

Borrowers may obtain loans for purchasing or repairing new or existing single family housing. Proceeds from a section 502 home loan may be used to build repair renovate or relocate a home or to purchase and prepare sites including providing water and sewage facilities.