USDA Home Repair Loans and Grants

1The five tests

Section 504, a program of USDA Rural Development, is for homeowners who cannot afford essential repairs: a leaking roof, a failing furnace or septic system, unsafe wiring, or a missing ramp or accessible bathroom. You qualify if all of these are true:

1. The home is in an eligible rural area.
2. You own the home and live in it. It cannot be rented out or used for a business, and the money cannot build a new home.
3. Your household income is at or below the very low limit for your county and household size, generally 50 percent of the area median income.
4. You cannot get affordable credit elsewhere.
5. For a grant, at least one applicant is 62 or older and cannot repay a loan.

2Test 1: Where the home is

USDA defines eligible rural areas on its online eligibility map. Many small towns and the countryside around them qualify, but many suburban and city addresses do not, even within a mostly rural county. Check your exact address on the map before you do anything else, because no other test matters if the address is outside the area. The map is updated from time to time, so an address that did not qualify years ago is worth checking again. If you live in a city, the other programs at the end of this guide are the place to look.

3Tests 2 and 3: Ownership and income

You must own the home and occupy it as your residence. Ownership is usually shown with a deed; ask the office if your situation is less simple, for example a home inherited without a new deed or land held by family members.

Income counts every adult in the household: wages, Social Security, SSI, pensions and other regular income. Rural Development publishes the very low limit for each county and household size, and the limits change each year, so look up the current figure for your county rather than relying on one from a neighbor or an old letter. Because the limits are tied to local incomes, they are higher in some counties than others.

4Tests 4 and 5: Credit elsewhere, and age for a grant

Section 504 is meant for people who cannot get an affordable repair loan from a bank or credit union, and the office will look at your finances to judge that. It also decides how much you can repay from your income and expenses.

Grants are only for homeowners 62 or older who cannot repay a loan. An older applicant who can afford some monthly payment may be offered a mix of loan and grant. A 71-year-old living on Social Security who needs a new roof and a wheelchair ramp costing $18,000, for example, might be offered a $10,000 grant for the safety and accessibility work and an $8,000 loan for the rest, which at 1 percent over 20 years comes to about $37 a month.

5What you can get

Swipe sideways to see the whole table.

A loan and a grant together can reach $50,000. Full title service is required when the total loan balance is more than $25,000.

Loan money can replace a roof, windows or doors, repair a foundation, fix or replace a heating system, water heater, plumbing or wiring, connect the home to public water or sewer or fix a well or septic system, and make the home more energy efficient, as long as it stays modest for the area. Grant money is narrower: dangerous wiring, a failed heating system in a cold climate, a collapsing porch or contaminated water, and ramps, grab bars, wider doorways or an accessible bathroom. Cosmetic work, additions and luxury items are not covered by either.

6Applying

Contact your state or local USDA Rural Development office; applications are taken year-round. You can start with the optional intake form, which helps the office tell you whether you may qualify before you complete a full application. Then gather proof that you own and live in the home, income documents for everyone in the household, proof of age if you are asking for a grant, and one or more written repair estimates from contractors.

Funding is limited and waiting times differ by state, so ask how long approvals are taking. Work generally has to be approved before it starts; do not hire a contractor or begin repairs expecting to be reimbursed later. Once you are approved, the office may inspect the home and the finished work before contractors are paid.

Home repair is a common target for fraud, especially after storms. Get written estimates from more than one contractor, check that each is licensed where your state requires it, never pay the full cost up front, and do not sign over insurance checks or a deed. A contractor who claims a government program will pay if only you sign today is a warning sign; see our guide to benefit scams.

7If you do not qualify, or need more

• The Weatherization Assistance Program, funded by the Department of Energy and run by local agencies, makes free energy-efficiency repairs such as insulation, sealing and furnace work for low-income households. Households receiving SSI or TANF generally qualify.
• LIHEAP can help repair or replace a broken heating or cooling system in some states; see our LIHEAP guide.
• USDA Housing Preservation Grants go to local nonprofits and public agencies, which use them to repair homes for low- and very-low-income rural residents.
• Cities and counties often run repair or accessibility programs funded by federal housing grants; ask your local housing or community development office.
• Medicaid home and community-based services programs in some states pay for accessibility changes that let a person stay at home.
• Buyers who need to repair a home they are purchasing can look at an FHA rehabilitation loan; see our guide to FHA loans.

Renters cannot use Section 504. If repairs in a rental are unsafe, the landlord is generally responsible; our guides to public housing and Section 8 vouchers explain how to ask for repairs in assisted housing.

9What your Rural Development office decides

Terms, funding and waiting times differ by state office and may change; confirm current amounts and income limits with USDA Rural Development. A separate disaster repair program has different limits and deadlines, and this article covers the standard program.