Guide to Federal Housing Programs: USDA Programs

A Guide to Federal Housing and Community Development Programs for Small Towns and Rural Areas

Permission is granted ONLY to nonprofit community-based organizations to reproduce and/or adapt this document, and only for their own use.

INTRODUCTION

This guide is meant to serve as a tool for rural communities to help identify public resources that may be used to meet the housing needs of low-income rural populations. It was first published by the Housing Assistance Council (HAC) in 1989, and has been updated occasionally to reflect federal program changes.

The guide is divided into five sections: U.S. Department of Agriculture Programs, U.S. Department of Housing and Urban Development Programs, Homeless Assistance Programs, Other Federal Agencies' Programs, and Private Investment Programs. Each program description includes a program purpose, eligibility criteria, terms, and contacts.

Also, following the title of each description is its program number from the Catalog of Federal Domestic Assistance (CFDA), except in the "Private Investment" section, as CFDA numbers do not exist for those programs. The CFDA is an annual government publication updated twice a year in supplements. It is available at http://www.cfda.gov, at the Government Printing Office in Washington, D.C., and in libraries.

Finding the right mix of federal or non-federal programs for your community involves understanding your needs and resources, planning well with a solid base of community support, and knowing the various programs available.

All government programs, federal and non-federal, change periodically as new legislation is adopted or new regulations are issued. Some of the programs are currently not funded or are funded at very low levels. Most programs are financially active unless otherwise stated. Before attempting to use one of the programs listed in this guide, always check with the funding source to be sure the guide's description is still accurate.

I. U.S. DEPARTMENT OF AGRICULTURE PROGRAMS

RURAL HOUSING SERVICE PROGRAMS¹
1. General Information
2. Homeownership Direct Loan Program (Section 502 Direct) (CFDA 10.410)
  
  The Section 502 program has two major parts: direct loans and guaranteed loans. The two share a single CFDA number, but are described separately here.
  1. Purpose
    
    Section 502 direct mortgage loans enable low- and very low-income households to purchase, build, repair, renovate, or relocate houses, including manufactured homes. These loans are also used to purchase and prepare sites and/or to provide water supplies and sewage disposal for sites. Section 502 loans may be used to refinance debts when necessary to avoid losing a home or when required to make necessary rehabilitation of a house affordable.
  2. Eligibility
    
    Eligible applicants must have very low or low incomes. Adjusted income ceilings are the same as for the HUD Section 8 Housing Choice Voucher program, and are available at http://www.huduser.org/datasets/il.html or from Rural Development or HUD offices. Families must be without adequate housing; able to afford the mortgage payments, taxes and insurance, typically within 22 to 26 percent of their incomes; and unable to obtain credit elsewhere. They must have reasonable credit histories. Priority is provided to families with hardships, including those living in deficient housing; to participants in mutual self-help housing; to servicing loans; and to participation loans.
  3. Terms
    
    Loans are for terms up to 33 years (38 years for those with incomes below 60 percent of the area median and who cannot afford 33-year terms, or 30 years for manufactured homes). No down payment is required. The promissory note interest rate is set by RHS. Payment assistance subsidy is provided and is directly related to the applicant/borrower's adjusted income as a percentage of area median income. Families without leveraged loans must pay a minimum of 22, 24, or 26 percent of their income (the percentages depend again on their income as a percent of area median) for principal, interest, taxes, and insurance (PITI) up to an amount not exceeding the promissory note rate. Families with leveraged (participation) loans are not required to meet the 22, 24, or 26 percent of adjusted income conditions.
  4. Standards
    
    Housing built under the Section 502 program must be modest. As of March 24, 2003, a modest home is defined as one with a market value below the limit established for its state. The limit for a state can be established by a formula that takes cost into account, or it may be a limit set by the state housing finance agency or by HUD's Federal Housing Administration for Section 203(b) loan guarantees. Check with a Rural Development office to find the limits applicable in a particular place. Houses constructed, purchased, or rehabilitated must comply with the voluntary national model building code adopted for the state as well as with RHS thermal and site standards. Manufactured housing must be permanently installed and meet the HUD Manufactured Housing Construction and Safety Standards and RHS thermal standards.
  5. Comments
    
    RHS is authorized to compensate Section 502 borrowers for construction defects.
  6. Variations
    
    i) Deferred Mortgage Payment Demonstration. For very low-income applicants unable to afford payments at 1 percent for 38 years, up to 25 percent of the required payment may be deferred. This option can reduce required incomes by 10 to 20 percent. However, the program has not been re-authorized or funded since FY 1995.
    
    ii) Rural Housing Demonstration Program. This program finances innovative housing that does not meet existing published standards, rules, regulations, or policies, provided that the housing is not constructed contrary to law and does not present an impediment to health or safety. Ten million dollars is available annually for this purpose. RHS issues an annual Notice of Funding Availability, usually in December.
    
    iii) Guaranteed Homeownership Loans. The Section 502 guaranteed program is discussed in more detail below.
    
    iv) Conditional Commitments. For a fee of $350, which includes appraisal and inspection, builders or manufactured home contractors may receive a commitment by Rural Development to finance a given house, conditioned on sale to a qualified applicant and the availability of funds.
    
    v) Homeownership Loan Inventory Program. From time to time, RHS/Rural Development has homes for sale that have been acquired through liquidation of loans. These homes may be purchased with Section 502 credit. Priority is given to those eligible for the program and to applicants for the purchase of these "inventory" homes. When no eligible applicants apply, the homes are available for others. Following price reductions, the homes are again first available only to households eligible for Section 502.
  7. Approval
    
    Rural Development local managers have authority to approve most Section 502 loans. Decisions on applications should be made within 30 to 60 days if no backlog exists.
  8. Availability of Funds
    
    Appropriated funds are apportioned for use by quarter for each fiscal year. After national and designated reserves are deducted, the balance is allocated to states by formula. RHS pools its unused money each fiscal year, usually in mid-summer. The demand for funds normally exceeds supply and RHS may choose to make all unused funds available on a first come, first served basis. Over-subscription in the program has resulted in more restricted, computerized pooling, but eligible applicants with viable applications should request processing even if a local or state office has used its initial allocation.
  9. Basic Instruction
    
    7 CFR Part 3550 subparts A, B, D and E and HB-1-3550
  10. Contact
    
    Contact a Rural Development office.
3. Homeownership Guaranteed Loan Program (Section 502 Guaranteed) (CFDA 10.410)
  1. Purpose
    
    Like direct loans, Section 502 guaranteed mortgage loans may be used to purchase, build, repair, renovate, or relocate houses, including manufactured homes; to purchase and prepare sites and/or to provide water supplies and sewage disposal for sites; and in some circumstances to refinance debts. A guaranteed loan is made by a bank or another private lender rather than by RHS/Rural Development, and RHS/Rural Development guarantees repayment if the borrower defaults.
  2. Eligibility
    
    i) Borrower. Eligible applicants must have incomes below 115 percent of area median income. Like Section 502 direct borrowers, families must be without adequate housing; able to afford the mortgage payments, taxes and insurance; and unable to obtain credit elsewhere. They must have reasonable credit histories.
    
    ii) Lender. Lenders must be approved by RHS/Rural Development.
  3. Terms
    
    Loans are for terms up to 30 years. The promissory note interest rate is set by the lender. No down payment is required. Currently, the program is limited to unsubsidized loans. The subsidy, when available, provides interest assistance and is based solely on income.
  4. Standards
    
    This program previously used the HUD 203(b) limits to denote "modest," but had to stop using them due to an adverse legal ruling. For this program, then, a "modest" home is one whose price the applicant/borrower can afford to pay. Like those financed by Section 502 direct loans, houses constructed, purchased, or rehabilitated with Section 502 guaranteed loans must comply with the voluntary national model building code adopted for the state as well as with RHS thermal and site standards. Manufactured housing must be permanently installed and meet the HUD Manufactured Housing Construction and Safety Standards and RHS thermal standards.
  5. Comments
    
    Because of the differences in interest rate and subsidy, the guaranteed program serves a much higher income level than the direct loan program.
  6. Approval
    
    Rural Development local managers have authority to approve most Section 502 guaranteed loans. Decisions on applications should be made within 30 to 60 days if no backlog exists.
  7. Basic Instruction
    
    7 CFR Part 1980
  8. Contact
    
    Contact a Rural Development office.
4. Very Low-Income Housing Repair Loans and Grants (Section 504) (CFDA 10.417)
  1. Purpose
    
    Loans up to $20,000 and grants up to $7,500 (loans and grants can be combined up to $27,500) are provided to very low-income homeowners to repair, improve or modernize their dwellings or to remove health and/or safety hazards, and to make dwellings accessible for household members with disabilities.
  2. Eligibility
    
    i) Loans. Eligible homeowner-occupants must have incomes below 50 percent of area median and be unable to obtain affordable credit elsewhere. Applicants must need to make repairs and improvements to make their dwellings more safe and sanitary or to remove health and safety hazards.
    
    ii) Grants. Grants are available only to those homeowners 62 years of age or older who cannot repay part or all of Section 504 loans. Grant funds may be used only to pay for repairs and improvements resulting in removal of health and/or safety hazards. If a person can pay part of the cost, a combination grant and loan is made.
  3. Terms
    
    Loans are for a period of up to 20 years at 1 percent interest. A grant may be recaptured if the property is sold in less than three years.
  4. Security
    
    Real estate mortgages are required for loans of $7,500 or more. Full title services are required for loans of $7,500 or more.
  5. Standards
    
    Repaired properties do not need to meet other RHS code requirements, except that installation of water and waste systems and related fixtures must meet local health department requirements. Water supply and sewage disposal systems should normally meet RHS requirements. All work must meet local codes and standards.
  6. Approval
    
    The Rural Development local office should make a decision on an application within 30 to 60 days if no backlog exists.
  7. Comments
    
    Not all the health and safety hazards in a home must be removed with Section 504 funds, provided major health and safety hazards are removed. The covering regulations provide for a liberal interpretation of the term "owner."
  8. Basic Instruction
    
    7 CFR Part 3550 Subpart A, C, D and E and HB-1-3550
  9. Contact
    
    Contact a Rural Development office.
5. Rural Housing Application Packaging Grants (Section 509(f)) (CFDA 10.442)
  1. Purpose
    
    Rural Housing Packaging Grants are made to enable eligible organizations to assist RHS/Rural Development to make loans and grants in targeted communities. For completed single-family housing applications, packaging fees are established nationally. For Section 514 and 515 applications, packagers are remunerated on a set, staged basis.
  2. Eligibility
    
    Private nonprofit organizations or corporations, states, state agencies, or units of local government are eligible if they participate annually in state Rural Development training and are certified as packagers by the agency.
  3. Allocation
    
    Each year RHS publishes a list of the eligible counties and dollars allocated and the number of packaging grants to be made, by state. No appropriation has been made since the mid-1990s, and carry over funds have been utilized. When these are depleted, funding must come from the Rural Housing Application Packaging Grant appropriation.
  4. Basic Instructions
    
    Instruction 1944-B (7 CFR Part 1944-Subpart B)
    Instruction 1940-L
  5. Contact
    
    Contact a Rural Development office.
6. Rural Rental and Cooperative Housing Loans (Section 515) (CFDA 10.415)
  1. Purpose
    
    Section 515 provides direct loans to finance modest rental or cooperatively owned housing designed for very low-, low-, and moderate-income families, elderly people, and persons with disabilities. Funds may be used to construct new housing or to purchase and rehabilitate existing structures for rental purposes. A substantial share of recent appropriations is used to maintain the existing portfolio. Congregate housing for the elderly and persons with disabilities and group homes for the developmentally disabled are authorized through special regulations and requirements, but nursing or "special care" homes are not eligible. Funds may also be used to buy and improve land and to provide necessary facilities such as water and waste disposal systems.
  2. Eligibility
    1. Owners. Individuals, partnerships, limited partnerships, for-profit corporations, nonprofit organizations, limited equity cooperatives, Indian tribes, and public agencies are eligible.
      
      Borrowers must be unable to obtain credit elsewhere that will result in rents affordable to low- and moderate-income tenants. A loan to a nonprofit organization or public body may be for up to 100 percent of the appraised value or development cost, whichever is less, plus 2 percent initial operating capital. A loan to an individual, partnership, limited partnership, or for-profit corporation operating on a limited-profit basis cannot exceed 97 percent (95 percent if low-income tax credits are involved) of the appraised value or development costs, whichever is less, and the borrower must provide the 2 percent initial operating capital.
    2. Tenants. Very low-, low-, and moderate-income households are eligible to live in Section 515-financed housing. Priority is given to those living in substandard housing. When rental assistance is used, top priority is provided for very low-income households (95 percent of tenants in rental assisted projects must have incomes below 95 percent of the area median).
  3. Terms
    
    Loans are for up to 30 years at an effective 1 percent interest rate, but amortized at a 50-year rate. A current rate is used for the promissory note but thereafter is used only to determine maximum rent payments. Tenants pay basic rent (rent including 1 percent mortgage payment), or 30 percent of adjusted income, whichever is greater. RHS rental assistance subsidy can be used to limit tenant payments to 30 percent of income. In some cases, Section 8 or state rental assistance is also utilized with Section 515 loans.
    
    Loans made through contracts entered into on or after December 15, 1989 cannot be prepaid. Owners may obtain guaranteed equity loans after 20 years as an incentive for participation.
  4. Standards
    
    The voluntary national model building codes and thermal standards apply. When moderate rather than substantial rehabilitation is involved, a separate RHS standard (guide) is used. RHS maintains square foot ranges by number of bedrooms to limit unit size. Projects must be designed to have two or more units per building, except for group homes or cooperatives which may use detached units.
  5. Variations
    1. Cooperative Housing. Separate rules (within the basic rental housing regulations) apply for the use of Section 515 limited equity consumer cooperative loans. Cooperative loans are required essentially to meet the conditions of the NOFA, but are funded from a general reserve rather than from the competitive funds used for new construction. (See comments below.) Housing units can be detached. Once eligible, owner-occupants are always eligible, even if their incomes increase beyond the moderate limit.
    2. Downtown Renewal Areas. RHS rules require that Section 515 projects be located in residential areas of rural communities with services. Exceptions can be made to place units in business districts as part of official renewal efforts. RHS determines who will receive loans for the new units.
    3. Congregate Housing. The capital costs for congregate or group home services may be financed for semi-independent tenants provided there is either an assured source of funding for the operating costs or these costs are affordable to the eligible client populations.
    4. Rural Housing Demonstration Program. This program permits the financing of innovative housing that does not meet existing published standards, rules, regulations, or policies, provided that the housing is not contrary to law and does not result in an impediment to health and safety. Ten million dollars is normally available annually for this purpose.
  6. Approval
    
    State directors have the authority to approve loans of up to $1,500,000. All requests for loans above $1,500,000 must be reviewed by the RHS national office. Currently Section 515 loans are made available on a competitive basis, using a national NOFA.
  7. Comments
    
    Projects may be on one or more sites. Scattered site authority adds flexibility. The overwhelming majority of loans are to entities using the Low Income Housing Tax Credit. RHS employs a "weighted priority" system for pre-applications. Weights are assigned for each funding cycle (fiscal year). The program's 50-year amortized mortgages at 1 percent are a unique and valuable resource for sponsors of low-income rental projects.
  8. Basic Instruction
    Instruction 1944-E. This instruction is expected to be "re-invented" and to be replaced with a shorter published rule and a detailed handbook.
  9. Contact
    
    Contact a Rural Development office.
7. Farm Labor Housing Loans and Grants (Sections 514/516) CFDA 10.405
  1. Purpose
    
    Section 514 loans and Section 516 grants are provided to build, buy, improve, or repair housing for farm laborers, including persons whose income is earned in aquiculture (fish and oyster farms) and those engaged in on-farm processing. Funds can be used to purchase a site or a leasehold interest in a site, to construct housing, to construct day care facilities and community rooms, to pay fees, to purchase durable household furnishings, and to pay construction loan interest.
  2. Eligibility
    1. Loans. Farmers, associations of farmers, family farm corporations, Indian tribes, nonprofit organizations, public agencies, and associations of farmworkers are eligible to apply for loans. In some instances, farmers unable to get credit elsewhere may obtain loans at a rate of interest based on the cost of federal borrowing (the figure is available at any Rural Development office).
    2. Grants. Nonprofit organizations, Indian tribes, public agencies, and farmworker associations are eligible for grants.
  3. Terms
    1. Loans. Loans are for 33 years at 1 percent interest, except as noted above under eligibility.
    2. Grants. A grant may cover up to 90 percent of the development cost for a project. The balance may be (and usually is) a Section 514 loan.
  4. Standards
    
    The standards are the same as for Section 515 except that:
    1. Housing seasonally occupied less than year-round but more than six months per year need only be in substantial conformance to the applicable code, provided it can be converted to Section 515 standards, and
    2. Housing seasonally occupied for six or fewer months must conform to RHS's seasonal farm labor housing standards.
  5. Approval
    1. Loans. State directors approve loans of up to $400,000 for on-farm housing upon RHS national office confirmation that funds are available. Larger loans and off-farm loans are approved in the national office. Section 514 loan funds for new projects are made competitive through the use of a national NOFA.
    2. Grants. State directors award grants with the prior approval of the national office.
  6. Comments
    
    Davis-Bacon wage rates are required for a project involving a Section 516 grant. When a grant is used, farmworker tenants cannot be required to work for any particular farmers.
    
    Farm labor housing tenants are eligible for the RHS Rental Assistance (RA) program. A set-aside of RA units is provided annually.
    
    Unlike all other RHS programs, the Farm Labor Housing program may be used in urban areas to house farm laborers working nearby.
  7. Basic Instruction
    
    Instruction 1944-D. As of January 2003 this instruction was being revised.
  8. Contact
    
    Contact a Rural Development office.
8. Rural Rental Assistance Payments (Section 521) (CFDA 10.427)
  1. Purpose
    
    This program enables low-income families or individuals to reside in RHS rural rental, cooperative, or farm labor housing without paying over 30 percent of their income for rent. RHS pays the owner the difference between the tenant's contribution and the monthly rental rate, including the cost of all utilities and services. Rental Assistance contracts between RHS and the owner are for five years and are renewable.
  2. Eligibility
    1. Project. Both RHS existing and newly constructed projects are eligible. Projects must be established on a nonprofit or limited profit basis.
    2. Tenant. Very low- and low-income elderly persons and persons with disabilities are eligible if they are unable to pay the basic monthly rent within 30 percent of adjusted monthly income and their annual adjusted income does not exceed the low-income limits set for the HUD Section 8 Housing Choice Voucher program. Those income limits are available at http://www.huduser.org/datasets/il.html or from Rural Development or HUD offices. In new projects, 95 percent of those assisted must have very low incomes. In existing projects the corresponding figure for tenant replacement purposes is 75 percent.
  3. Approval
    
    State directors approve applications with prior concurrence of the RHS national office.
  4. Rental Assistance
    
    Section 515 RA renewal units are allocated to states by following annual surveys of need. Units for new construction are controlled by RHS.
  5. Comments
    
    Requests for Rental Assistance are generally initiated by borrowers (project owners). However, if a borrower does not request it, people eligible for Rental Assistance in a project may petition the borrower to obtain Rental Assistance for them. There is an appeals procedure if Rental Assistance is denied by the borrower. In existing projects, demand far exceeds supply. Annual appropriations are seldom at a level high enough to provide much RA in existing projects.
  6. Basic Instruction
    
    Instruction 1930-C. Like the other multifamily instructions, this rule also is being reinvented.
  7. Contact
    
    Contact a Rural Development office.
9. Rural Self-Help Housing Technical Assistance Grants (Section 523) (CFDA 10.420)
  1. Purpose
    
    The self-help technical assistance (TA) program provides administrative funding to organizations sponsoring self-help housing development. Under self-help, a group of families jointly contribute labor to build their own homes, which are usually financed through RHS's Section 502 loan program, under guidance from a qualified construction supervisor. Individual families may also participate to rehabilitate their own homes but this part of the program is not encouraged. The purposes of the program are to lower the cost of housing and provide skills enhancement to participating families.
  2. Eligibility
    
    Public and nonprofit groups must show that they have the ability to supervise a project or that they will receive assistance from a group having this ability.
  3. Terms
    
    Contracts are normally for two years.
  4. Approval
    
    Rural Development state directors approve projects, subject to RHS control of funds. Approval time should be 40 to 180 days from the time discussion of the project begins. However, the program is often oversubscribed, and some applicants may experience extended waiting periods.
  5. Comments
    1. Lower Payments. A family participating in a self-help program can lower the amount of the Section 502 loan by 20 percent or more. For example, in 2000 the average cost of a new RHS house was $75,292. Reduced by 20 percent, the average house would cost only $60,234. The difference in monthly principal and interest payment would be $54.72, enough to allow some families with lower incomes into the program.
    2. Handbooks. RHS has developed comprehensive self-help handbooks which are made available to organizations serious about sponsoring self-help housing.
    3. TA Contracts. RHS contracts with four regional organizations to provide training and technical assistance to self-help sponsors and assistance to applicants to become self-help sponsors.
  6. Basic Instruction
    
    Instruction 1944-I. As of January 2003 this regulation was being reinvented.
  7. Contact
    
    Contact a Rural Development office.
10. Rural Housing Site Loans (Sections 523 and 524) (CFDA 10.411)
  1. Purpose
    
    The Section 523 and 524 programs provide loans to purchase and develop building sites and to construct streets and utilities. Section 523 loans are for self-help housing sites and Section 524 loans are for other sites for low- and moderate-income families. Section 524 sites may also be sold to public and nonprofit organizations using other federal, state, or local programs to house low- and moderate-income families.
  2. Eligibility
    
    Nonprofit organizations and public agencies may receive these loans.
  3. Terms
    
    All loans are repayable in two years. Section 524 loans had an RHS market rate interest of 6.125 percent in January 2002. Section 523 loans for self-help organizations carry a 3 percent interest rate.
  4. Comment
    
    Both programs are usually extremely underfunded.
  5. Basic Instructions
    
    Instruction 444.8 (scroll down to find 444.8)
    Instruction 1924-C
  6. Contact
    
    Contact a Rural Development office.
11. Rural Housing Preservation Grants (Section 533) (CFDA 10.433)
  1. Purpose
    
    Rural Housing Preservation Grant (HPG) funds enable sponsoring organizations to assist low- and very-low income homeowners and landlords serving these populations to repair or rehabilitate their dwellings. The grants are competitive and made available in areas where there is a concentration of need. Sponsors combine HPG funds with other programs or funds and use them as loans, grants, or subsidies for recipient households, based on plans contained in the sponsors' applications.
  2. Eligibility
    
    Sponsors may be nonprofit organizations, Indian tribes, units of local government, or state agencies.
  3. Terms
    
    Funds must be used within a period of two years. RHS/Rural Development annually issues Requests for Proposals in each state and rates pre-applications by a weighted point system. Grantees may use up to only 20 percent of the HPG for administration. Historic preservation agreements require review by the State Historic Preservation Office.
  4. Standards
    
    The property must meet locally accepted development standards or the voluntary model national standards recognized by RHS/Rural Development. The Secretary of Interior's Standards for Historical Properties apply to historic properties.
  5. Variations
    
    The program may be used on rental properties when landlords agree to maintain the units for low-income use for a minimum of five years.
  6. Approval
    
    State directors approve HPG requests and have authority to interchange funds between HPG and the Section 504 grant program.
  7. Comments
    
    HPG enables local organizations to design their own programs. Rural Development monitors but does not participate in the approval process for individual homeowner recipients.
  8. Basic Instruction
    
    Instruction 1944-N. As of January 2003, this rule is being revised.
  9. Contact
    
    Contact a Rural Development office.
12. Guaranteed Rural Rental Housing Program (Section 538) (CFDA 10.438)
  1. Purpose
    
    Under the Section 538 program, RHS guarantees loans made by private lenders for the development of affordable rural rental housing.
  2. Eligibility
    1. Lenders. The banks or thrifts that receive loan guarantees must be approved by RHS. To obtain that approval, a lender must be approved to make multifamily housing loans by HUD, Fannie Mae, or Freddie Mac or by the state or local housing finance agency, or it must be a member of the Federal Home Loan Bank System with demonstrated multifamily housing loan ability.
    2. Borrowers. Eligible borrowers include individuals, nonprofit or for-profit corporations, partnerships, state or local public agencies, limited liability companies, trusts, or Indian tribes.
    3. Tenants. Households with incomes below 115 percent of area median income may live in units developed with Section 538 guarantees.
  3. Terms
    
    The maximum term is the lesser of 40 years or the remaining economic life of the project. Interest rates must be fixed and must not exceed the rate published in RHS's Notice of Funding Availability (NOFA). The loan may be prepaid at the determination of the borrower. Rent, including utilities paid by the tenants, cannot exceed 30 percent of 115 percent of the area median income.
    
    RHS must provide interest credit to reduce the interest to the Treasury rate for at least 20 percent of the loans made.
  4. Standards
    
    The program permits varying housing types. Each project must contain at least five units, be in a rural area and be under one management.
  5. Approval
    
    Approval is made by RHS on a competitive basis, the scoring for which is outlined in the NOFA published in the Federal Register for each fiscal year.
  6. Comments
    
    Priority is given to applications for projects located in smaller rural communities, those located in the most needy communities with the highest percentage of leveraged funds, those with the highest ratio of three- to five-bedroom units, those located in Empowerment Zones or Enterprise Communities, or those on tribal land. Priority loans compete for set-aside funds.
    
    The size of Section 538 units tends to be larger than those financed under Section 515. Tenant incomes are higher because the subsidy is not as deep.
    
    Tax-exempt financing can be used as a source of capital for the guaranteed loan.
  7. Basic Instruction
    
    7 CFR Part 3565 Subparts A through J, aided by the application submission and ranking criteria in an annual NOFA.
  8. Contact
    
    Contact a Rural Development office.
    or
    Joyce Allen
    Multi-Family Guaranteed Loan Division
    Rural Housing Service
    U.S. Department of Agriculture
    1400 Independence Ave., S.W.
    Stop 0781
    Washington, DC 20250
    202-690-4499
    jallen@rdmail.rural.usda.gov
13. Direct Housing Natural Disaster Loans and Grants (Section 504 Disaster Loans and Grants) (CFDA 10.444)
  1. Purpose
    
    Funds are available to very-low income homeowners for repair and replacement of damaged property as a result of a natural disaster. Loans are made in counties named by the Federal Emergency Management Agency as being eligible for federal assistance under an emergency declaration by the president.
  2. Eligibility
    
    Loan recipients must have sufficient income to repay the loans. Grant recipients must be 62 years of age or older and be unable to repay loans. Very low-income limits range from $22,650 for a single-person household, depending on an area's median income. Applicants' incomes cannot exceed the very low-income limit set for the HUD Section 8 Housing Choice Voucher program. Those income limits are available at http://www.huduser.org/datasets/il.html or from Rural Development offices or HUD offices.
  3. Terms
    
    Applicants may file applications from the date of the emergency declaration and until supplemental appropriated funds are exhausted.
  4. Contact
    
    Contact a Rural Development office.
    or
    Single Family Division
    Rural Housing Service
    U.S. Department of Agriculture
    1400 Independence Ave., S.W.
    Washington, DC 20250
    202-720-1474
    http://www.rurdev.usda.gov/rhs
14. Direct Housing Natural Disaster (Section 502 Disaster Loans) (CFDA 10.445)
  1. Purpose
    
    This program assists qualified lower-income rural families to meet emergency assistance needs resulting from natural disasters to buy, build, rehabilitate, or improve dwellings in rural areas. Natural disaster areas only include those areas identified by a presidential declaration.
  2. Eligibility
    To be eligible for a loan under this program, an applicant must be unable to secure a loan from other sources.
  3. Terms
    
    Funds are available to the extent that funds are not provided by the Federal Emergency Management Agency (FEMA). Applicants must apply at the Rural Development local office serving the county where the dwelling is located. Applications may be filed any time after the date of the emergency declaration until supplemental appropriated funds are exhausted.
  4. Contact
    
    Contact a Rural Development office.
    or
    Single Family Division
    Rural Housing Service
    U.S. Department of Agriculture
    1400 Independence Ave., S.W.
    Washington, DC 20250
    202-720-1474
    http://www.rurdev.usda.gov/rhs
15. Rural Capacity Development Initiative (CFDA 10.446)
  1. Purpose
    
    The Rural Capacity Development Initiative (RCDI) was created in 2000. It is intended to develop the capacity and ability of nonprofit community-based housing and community development organizations and low-income rural communities to improve housing, community facilities, and community and economic development projects in rural areas. Through RCDI, RHS provides grants to intermediaries (including HAC in funding year 2001 and 2002) to provide technical assistance to qualified organizations.
    
    Besides aiming to improve recipients' organizational capacity by training and resources, the funds are used to develop the capacity of recipients to conduct community development programs and initiatives, to leverage and access alternative funding, to develop successful community facilities, and to assist recipients in completing pre-development requirements for housing and community facilities.
  2. Eligibility
    
    Eligible intermediaries must be private nonprofit organizations and must have at least three years of experience working with nonprofit organizations.
  3. Terms
    
    Applicants must provide matching funds from non-federal sources in an amount at least equal to the federal grant. Past grants to intermediaries have ranged from $50,000 to $1 million.
  4. Contact
    
    Community Programs
    Rural Housing Service
    U.S. Department of Agriculture
    Stop 0787
    1400 Independence Ave., S.W.
    Washington, DC 20250-0787
    202-720-1498
    http://www.rurdev.usda.gov/rhs/rcdi/index.htm
16. Empowerment Zones Program
  1. Purpose
    
    This program provides grants and tax credits to rural places designated as Empowerment Zones and Enterprise Communities (EZ/ECs) to stimulate the creation of new jobs, particularly for the disadvantaged and long-term unemployed, and to promote revitalization of economically distressed areas. Unsuccessful EZ/EC applicants have been designated Champion Communities, eligible for some assistance.
  2. Eligibility
    
    State and local governments, tribes, regional planning organizations, nonprofits, and other locally based organizations are eligible to apply for EZ/EC status. Even if another entity submits the application, the state, local, and tribal governments with jurisdiction over the area must nominate it for designation. Specific criteria may vary from one funding round to another. For Round III in FY 2001, the population of a nominated area could not exceed 30,000 and a nominated area had to have pervasive poverty, unemployment, and general distress, and be less than 1,000 square miles in area.
  3. Terms
    
    The area must have a strategic plan identifying its vision for change, how various players will work together as partners, what other resources will be available, and how economic opportunity and community development will be provided.
  4. Contact
    
    Office of Community Development
    U.S. Department of Agriculture
    Stop 3203
    1400 Independence Ave., S.W.
    Washington, DC 20250-3203
    202-619-7980 or 1-800-645-4712
    ocd@ocdx.usda.gov
    http://www.ezec.gov
RURAL DEVELOPMENT COMMUNITY PROGRAMS
1. Water and Waste Disposal Systems for Rural Communities (CFDA 10.760)
  1. Purpose
    This program provides direct loans, guaranteed loans, or grants to construct, repair, improve, expand, or otherwise modify rural water supply and distribution facilities and waste collection, pumping, treatment, or disposal facilities in rural areas and towns of up to 10,000 people.
  2. Eligibility
    Public entities such as municipalities, counties, special purpose districts and Indian tribes, and nonprofit corporations are eligible to apply.
  3. Terms
    The maximum term on all loans is 40 years. Interest rates on loans are set periodically. The current rates may be obtained from any Rural Development office.
    
    Grant funds may be used for up to 45 percent or 75 percent of eligible facility development costs, depending on the median income of the area served and the relationship between debt service costs to users and the area median income.
    
    All loans must be secured to protect federal interest adequately. Bonds or notes pledging taxes, assessments, or revenues may be accepted as security if they meet statutory requirements. Mortgages may also be taken on organizations' facilities when state laws permit.
  4. Approval
    Projects are approved by district and state directors. Approval time is 30 to 90 days.
  5. Basic Instructions
    Instructions 1942-A and 1942-H
  6. Contact
    Contact a Rural Development office
    or
    Assistant Administrator
    Water and Environmental Programs
    Rural Utilities Service
    U.S. Department of Agriculture
    1400 Independence Ave., S.W.
    Washington, DC 20250
    202-690-2670
    http://www.rurdev.usda.gov/rus
2. Water and Waste Disposal Loans and Grants (Section 306C) (CFDA 10.770)
  1. Purpose
    The Section 306C program includes direct loans and grants to provide water and/or waste disposal services. The program is authorized to serve low-income rural communities nationwide, but funding has been limited to the colonias along the U.S.-Mexico border.
  2. Eligibility
    Local governments, federally recognized Indian tribes, U.S. territories and possessions, and nonprofit associations can receive Section 306C funding.
  3. Terms
    The program can cover 100 percent of project costs. Funding may be used to construct, extend, or improve a community water or waste system, extend service lines, or connect individual residences to a system. A funding recipient may also grant funds to individuals to extend service lines, connect their plumbing to a system, install plumbing and related fixtures, or construct bathrooms.
  4. Basic Instruction
    7 CFR 1777
  5. Contact
    Contact a Rural Development office
    or
    Assistant Administrator
    Water and Environmental Programs
    Rural Utilities Service
    U.S. Department of Agriculture
    1400 Independence Ave., S.W.
    Washington, DC 20250
    202-690-2670
    http://www.rurdev.usda.gov/rus
3. Community Facilities Loans and Grants (CFDA 10.766)
  1. Purpose
    This program makes available direct loans, loan guarantees, and grants for community facilities that provide essential services to rural residents including community centers, hospitals, nursing homes, clinics, libraries, schools, and fire protection.
  2. Eligibility
    Public entities, Indian tribes, and nonprofit organizations are eligible. The community to be served must be a rural area, town, or incorporated area with less than 20,000 population.
  3. Terms
    RHS can guarantee up to 90 percent of a commercial lender's loss. Direct loans may be made to applicants who are unable to obtain commercial credit. Grants are typically used to fund projects under special initiatives, such as Native American community development efforts, federally designated Enterprise and Champion Communities, and others. A grant may be used for up to 75 percent of a project's cost.
    
    For direct loans, interest rates vary depending on the median income of the community. Rates and terms for guaranteed community facility loans are negotiated by borrower and lender.
  4. Comments
    Priority for funding goes to health care facilities and public safety purposes such as rescue or fire protection facilities.
  5. Basic Instructions
    Instructions 1942-A, 3570 and 3575
  6. Contact
    Contact a Rural Development office
    or
    Deputy Administrator
    Community Programs
    Rural Housing Service
    U.S. Department of Agriculture
    1400 Independence Ave., S.W.
    Washington, DC 20250-3222
    202-720-1490
    http://www.rurdev.usda.gov/rhs
4. Business and Industry Loans (CFDA 10.768)
  1. Purpose
    The Business and Industry Loans program provides direct and guaranteed loans for the purpose of improving, developing, or financing business, industry and employment, and improving the economic and environmental climate (including pollution abatement and control) in rural communities.
  2. Eligibility
    An applicant may be a cooperative, corporation, partnership, trust, or other legal entity organized and operated on a profit or nonprofit basis; an Indian tribe; a municipality, county, or other political subdivision of a state; or an individual. Applicants must be located in areas other than cities having a population of more than 50,000 and immediately adjacent to urbanized and urbanizing areas with population density of more than 100 persons per square mile. Preference is given to loans in open country, rural communities, and towns with populations of 25,000 or less and, on applications of equal priority, to veterans.
  3. Terms
    Existing business applicants must provide a minimum of 10 percent tangible balance sheet equity for guaranteed and direct loans. For new businesses, at least 20 percent is required for guaranteed loans. For direct loans, new businesses and those businesses that cannot offer personal or corporate guarantees, or for energy-related businesses, 20-25 percent equity is required. Interest rates on direct loans are set quarterly at the prime rate. Interest rates on guaranteed loans are negotiated between the borrower and the lender.
  4. Approval
    Rural Development state directors approve applications. Approval time is from 60 to 120 days.
  5. Basic Instructions
    Instructions 1980-E and 4279
  6. Contact
    Contact a Rural Development office
    or
    Administrator
    Rural Business-Cooperative Service
    U.S. Department of Agriculture
    1400 Independence Ave., S.W.
    Washington, DC 20250-3201
    202-690-4730
    http://www.rurdev.usda.gov/rbs
5. Rural Business Enterprise Grants (CFDA 10.769)
  1. Purpose
    Rural Business Enterprise Grants are used for a broad number of funding areas. Eligible activities include developing, constructing or acquiring land, buildings, plants, equipment, streets, and roads. Building necessary water supply and waste disposal facilities is also an eligible activity. RBEG funds can also be used to create, expand, or operate rural distance learning networks or programs that provide educational or job training instruction related to potential employment or job advancement to adult students.
  2. Eligibility
    1. Applicant. State and local government entities, tribes, and nonprofit organizations that serve rural areas are eligible.
    2. Beneficiary. RBEG grantees must use the funds to assist small and emerging private businesses that will employ 50 or fewer new employees and have less than $1 million in projected gross revenue.
  3. Terms
    There are no matching requirements. Fund are allocated to states based on size of rural population and percent of nonmetropolitan per capita income.
  4. Comments
    For this program, a rural area is defined as a city, town, or unincorporated area that has a population of 50,000 inhabitants or less, other than an urbanized area immediately adjacent to a city, town, or unincorporated area that has a population in excess of 50,000 inhabitants.
  5. Basic Instruction
    Instruction 1942-G
  6. Contact
    Director
    Specialty Lenders Division
    Rural Business-Cooperative Service
    Department of Agriculture
    1400 Independence Ave., S.W.
    Washington, DC 20250-3222
    202-720-1400
    http://www.rurdev.usda.gov/rbs
6. Rural Business Opportunity Grants (CFDA 10.773)
  1. Purpose
    The Rural Business Opportunity Grants (RBOG) program is intended to assist in the sustainable economic development of rural areas by paying the costs of economic planning for rural communities, technical assistance for rural businesses, or training for rural entrepreneurs or economic development officials.
  2. Eligibility
    Grants may be made to public bodies, nonprofit corporations, Indian tribes, and cooperatives with members that are primarily rural residents and that conduct activities for the mutual benefit of the members.
  3. Comments
    For this program, a rural area is defined as any area of a state that is not within the boundaries of a city with a population in excess of 10,000 inhabitants.
  4. Contact
    Contact a Rural Development office
    or
    Rural Business-Cooperative Service
    U.S. Department of Agriculture
    Specialty Lenders Division
    Stop 3225, Room 6767
    1400 Independence Ave., S.W.
    Washington, DC 20250-1521
    202-720-1400 http://www.rurdev.usda.gov/rbs
7. Smaller Rural Development Community Programs
  1. Technical Assistance and Training Grants (CFDA 10.761)
    1. Purpose: Grants are available to nonprofit organizations to provide technical assistance to rural communities experiencing water or waste disposal problems. This program has been used primarily as a circuit rider program for water systems.
    2. Basic Instruction: Instruction 1942-J
    3. Contact: a Rural Development office
      or
      Assistant Administrator
      Water and Environmental Programs
      Rural Utilities Service
      U.S. Department of Agriculture
      1400 Independence Ave., S.W.
      Washington, DC 20250
      202-690-2670
      http://www.rurdev.usda.gov/rus
  2. Solid Waste Management Grants (CFDA 10.762)
    1. Purpose: These grants go to public agencies and nonprofits to provide technical assistance and training in order to reduce or eliminate pollution of water resources and improve planning and management of solid waste sites.
    2. Basic Instruction: Instruction 1942-J
    3. Contact: a Rural Development office
      or
      Water and Waste
      Rural Utilities Service
      U.S. Department of Agriculture
      1400 Independence Ave., S.W.
      Washington, DC 20250
      202-690-2670
      http://www.rurdev.usda.gov/rus
  3. Emergency Community Water Assistance Grants (CFDA 10.763)
    1. Purpose: These grants provide assistance to public bodies, tribes, and nonprofits to improve conditions in places of less than 15,000 population experiencing a significant decline in drinking water quantity or quality.
    2. Basic Instruction: Instruction 1942-K
    3. Contact: Assistant Administrator
      Water and Environmental Programs
      Rural Utilities Service
      U.S. Department of Agriculture
      1400 Independence Ave., S.W.
      Washington, DC 20250
      202-690-2670
      http://www.rurdev.usda.gov/rus
  4. Intermediary Relending Program (CFDA 10.767)
    1. Purpose: This program provides grants to state or local governments, tribes, cooperatives, and nonprofits, usually community development corporations, who in turn help local businesses and nonprofits establish rural development projects that create jobs, expand business and diversify and strengthen local economies.
    2. Basic Instruction: Instruction 1948-C
    3. Contact: Rural Development office
      or
      Rural Business-Cooperative Service
      Room 6867
      Stop 3225
      1400 Independence Ave., S.W.
      Washington, DC 20250-3225
      202-690-4100
      http://www.rurdev.usda.gov/rbs
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