Home repairs like fixing a leaking roof, upgrading faulty wiring, or replacing an inefficient furnace are essential for maintaining a safe and livable home. For very low-income rural homeowners, however, the cost of these repairs can be daunting.
The USDA’s Single-Family Housing Repair Loan and Grant program, commonly referred to as the Section 504 program, is designed to help eligible homeowners cover these critical expenses with affordable financial assistance.
How the Section 504 Loan and Grant Program Works
The program offers two types of assistance:
-
Low-Interest Loans: Homeowners can apply for loans up to $40,000 with a fixed interest rate of just 1% and a repayment term of up to 20 years. This makes monthly payments manageable for those with very limited incomes.
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Home Repair Grants: Homeowners aged 62 or older with very low income who cannot repay a loan may qualify for grants up to $10,000. Grants do not require repayment, provided the homeowner remains in the home for at least three years following the grant.
Eligible seniors may combine loan and grant funds, receiving up to $50,000 total assistance.
Eligibility Requirements
To qualify, applicants must:
- Own and occupy the home as their primary residence.
- Live in an eligible rural area, as defined by the USDA. The USDA’s property eligibility tool helps determine if a location qualifies.
- Have a very low income, generally below 50% of the area median income. The USDA provides updated income limits based on household size and location.
- Demonstrate an inability to secure affordable credit elsewhere.
For grants, the homeowner must also be age 62 or older with limited ability to repay.
Permitted Uses of Funds
The loan and grant funds are intended for necessary repairs and improvements, including:
- Roof repairs or replacement
- Plumbing and electrical system updates
- Energy-efficient window replacement
- Installation of new heating and water systems
- Accessibility modifications such as wheelchair ramps or bathroom alterations
- Removal of health hazards like lead paint or asbestos
Funds are not intended for cosmetic renovations or home expansions.
Important Terms and Conditions
| Feature | Loan Details | Grant Details |
|---|---|---|
| Maximum Amount | Up to $40,000 | Up to $10,000 |
| Interest Rate | 1% fixed | None (grant) |
| Repayment Term | Up to 20 years | Not applicable |
| Eligibility | Very low-income homeowners in eligible rural areas | Very low-income seniors (62+) unable to repay loans |
| Repayment Required | Yes | No, if home retained 3+ years |
(Information sourced from USDA Rural Development as of 2025.)
Common Misunderstandings
- Not free money for all homeowners: The loan must be repaid with interest, while grants are limited to qualifying seniors.
- Not for home additions or remodels: Funds cover repairs and improvements that improve safety and habitability.
- Income alone does not guarantee eligibility: Location, ownership, and credit qualification criteria apply.
Frequently Asked Questions
How do I apply? Contact your local USDA Rural Development office or visit the USDA website to access applications and eligibility tools.
Can I choose my own contractor? The USDA typically requires contractor approval to ensure quality and compliance with program standards.
What if I sell the home after receiving a grant? Selling within three years may require repayment of the grant funds.
This program plays a critical role in preserving safe housing for low-income rural residents. For additional financial assistance options related to home improvement, see our article on Sweat Equity loans. For official details, visit the USDA’s Section 504 Home Repair program page.