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What should I know about rural housing direct loans (Section 502)?

Authored By: GeorgiaLegalAid.org
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Rural housing direct loans in Georgia

Contents


What are rural housing direct loans?

Rural housing direct loans are loans that are directly funded by the government. These loans are available for low- and very low-income households to buy homes. The purpose of this loan is to provide financing at reasonable rates and terms with no down-payment. Mortgage payments are based on the household's adjusted income. These loans are commonly referred to as Section 502 Direct Loans.  

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Who is eligible for rural housing direct loans? 

To apply for direct loans, you must have very low or low income. Very low income is defined as below 50% of the area median income (AMI).  Low income is between 50-80% of AMI. Moderate income is 80-100% of AMI.

 

Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance. These payments are typically within 22-26% of your income. In addition, you must be unable to get credit, yet have reasonable credit histories. Elderly and disabled persons applying for the program may have incomes up to 80% of area median income (AMI).

 

Who approves Section 502 loan requests?

Rural Development officials have the authority to approve most Section 502 loan requests. Decisions on complete applications are generally made within 30 days. 

 
How may I use these loans?

Applicants may obtain 100% financing to: 

  • purchase an existing residence, 

  • purchase a site and construct a residence, or 

  • purchase newly constructed residences located in rural areas.

Funds can be used to: 

  • build, 

  • repair, 

  • renovate or 

  • relocate a home, or 

  • to purchase and prepare sites, including providing water and sewage facilities.

 

How long will the loan last? 

Loans are for up to 33 years (38 years for those with incomes below 60% of AMI and who cannot afford 33-year terms). The term is 30 years for manufactured homes. The interest rate and amount of subsidy are determined by family income as percentage of AMI. A family pays from 22-26% of their income for principal, interest, taxes, and insurance (PITI) up to an amount not exceeding the promissory note rate. There is no required down payment. Rural Housing Section must also determine repayment feasibility. T using ratios of repayment (gross) income to PITI and to total family debt.

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What are the housing standards under the Section 502 program? 

Housing must be modest in size, design, and cost. Modest housing must not have a market value more than the applicable loan limit. Houses constructed, purchased, or rehabilitated must meet the voluntary national model building code. These codes are adopted by the state and Rural Housing Section thermal and site standards. Manufactured housing must be permanently installed. It must meet:

  • HUD Manufactured Housing Construction and Safety Standards and 

  • Rural Housing Section thermal and site standards.

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Contents


What can I do to apply for this program?

Please visit the US Department of Agriculture’s Rural Development page to find resources, forms, guides, and more to help you apply.

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Resources

Locations & Contact information 

Northwest Georgia, Cartersville Area Office 

Counties Served: Bartow, Catoosa, Carroll, Chattooga, Cherokee, Clayton, Cobb, Coweta, Dade, Douglas, Fannin, Fayette, Fulton, Floyd, Gilmer, Gordon, Haralson, Harris, Heard, Meriwether, Murray, Paulding, Pickens, Polk, Talbot, Troup, Walker, Whitfield

  •  Cartersville Area Office | (678) 719-3508 | FAX: 855-514-3347 |12 Felton Place, Suite A | Cartersville, GA 30120

  •  Newnan Sub-Area Office | (770) 253-2555 | FAX: 855-606-4587 | 246 Bullsboro Drive, Suite C |Newnan, GA  30263

Northeast Georgia, Monroe Area Office 

Counties Served: Banks, Barrow, Clarke, Dawson, Dekalb, Elbert, Forsyth, Franklin, Greene, Gwinnett, Habersham, Hall, Hart, Jackson, Lumpkin, Madison, Morgan, Newton, Oconee, Oglethorpe, Rabun, Rockdale, Stephens, Towns, Union, Walton, White

  •  Monroe Area Office | (770) 267-1413 ext. 4 | FAX: 855-596-4589 |111 East Spring Street, Suite B| Monroe, GA 30655

  •  Clarkesville Sub-Area Office | (706) 754-6239 ext. 4 | FAX: 855-514-3349 | 555 Monroe Street, Unit 83 | Clarkesville, GA 30523

West-Central Georgia, Fort Valley Area Office

Counties Served: Bibb, Bleckley, Butts, Chattahoochee, Clay, Crawford, Henry, Houston, Jasper, Jones, Lamar, Lee, Macon, Marion, Monroe, Muscogee, Peach, Pike, Pulaski, Quitman, Randolph, Schley, Spalding, Stewart, Sumter, Taylor, Terrell, Twiggs, Upson, Webster

  •  Fort Valley Area Office | (478) 827-0016 ext. 4 | FAX: 866-567-5757 | 1030 Peach Parkway, Suite 4 | Fort Valley, GA 31030

  •  Barnesville Sub-Area Office | (770) 358-0787 ext. 4 | FAX: 855-501-2461 | 231 Highway 42 North, Suite D | Barnesville, GA 30204

  •  Dawson Sub-Area Office | (229) 995-5811 | FAX: 855-546-2690 | 955 Forrester Drive SE | Dawson, GA 39842

East-Central Georgia, Sandersville Area Office

Counties Served: Baldwin, Burke, Columbia, Emanuel, Hancock, Jefferson, Jenkins, Johnson, Laurens, Lincoln, McDuffie, Putnam, Richmond, Screven, Taliaferro, Treutlen, Warren, Washington, Warren, Wilkes, Wilkinson

  •  Sandersville Area Office | (478) 552-6073 | 478-552-6071 | 478-552-0901|FAX: 478-553-0372 | 1222 S. Harris Street | Sandersville, GA 31082

  •  Thomson Sub-Area Office | (706) 595-1339 ext. 4 | FAX: 855-803-3866 | 226 Bob Kirk Road, NW | Thomson, GA 30824

Southwest Georgia, Tifton Area Office

Counties Served: Baker, Ben Hill, Berrien, Brooke, Calhoun, Colquitt, Cook, Crisp, Decatur, Dooly, Dougherty, Early, Echols, Grady, Irwin, Lanier, Lowndes, Miller, Mitchell, Seminole, Thomas, Tift, Turner, Wilcox, Worth

  •  Tifton Area Office | (229) 382-0273 | FAX: 855-803-3870 | 2406 North Tift Avenue, Suite 103 | Tifton, GA 31794

  •  Camilla Sub-Area Office | (229) 336-0371 | FAX: 855-514-3344 | 30 West Broad Street, Room 101 | Camilla, GA 31730 

Southeast Georgia Douglas Area Office

Counties Served: Appling, Atkinson, Bacon, Brantley, Bryan, Bulloch, Camden, Candler, Charlton, Chatham, Clinch, Coffee, Dodge, Effingham, Evans, Glynn, Jeff Davis, Liberty, Long, McIntosh, Montgomery, Pierce, Tattnall, Telfair, Toombs, Ware, Wayne, Wheeler

  •  Douglas Area Office | (912) 384-4811 ext. 4 | FAX: 855-546-2690 | 703 East Ward Street | Douglas, GA 31533

  •  Blackshear Sub-Area Office | (912) 449-5577 ext. 4 | FAX: 855-501-2466 | 705 College Avenue, Suite 104 | Blackshear, GA 31516

  •  Statesboro Sub-Area Office | (912) 871-2620 ext. 4 | FAX: 855-794-1327 | Bulloch County Agribusiness Center |151 Langston Chapel Road, Room 500 | Statesboro, GA 30458 

STATE OFFICE:

Rural Development
Stephens Federal Building
355 East Hancock Avenue
Athens, Georgia 30601
Toll Free: 800-338-5975 | TDD: (706) 546-2034 | Phone: (706) 546-2162

Last Review and Update: Mar 13, 2022
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