USDA Section 504 Home Repair Loans and Grants

Last updated: July 28, 2026

The official name is the Single Family Housing Repair Loans and Grants program. It is often called the Section 504 Home Repair program. USDA Rural Development runs it through offices that serve specific states and counties.

This is not an automatic “free repair grant.” Age, income, assets, the repair purpose, the property, and funding all matter. Under USDA’s current handbook, a qualified applicant age 62 or older with an eligible grant purpose may receive grant funds first, up to the lifetime limit. USDA then reviews loan repayment ability if the grant does not cover the approved work.

This guide covers current rules, forms, repayment and lien details, manufactured-home limits, disaster options, and denials. For other programs, see our rural repair guide.

USDA Section 504 quick facts

USDA posts the current limits, forms, and state selection on its Section 504 program page. Applications are accepted throughout the federal program year, but USDA warns that processing time depends on funding in the applicant’s area.

The loan, grant, and combined option are different

The Section 504 loan

The loan is a repayable federal loan. It may be used for general repairs, improvements, modernization, or removal of health and safety hazards. The current maximum is $40,000. The interest rate is fixed at 1%, and the maximum term is 20 years.

The maximum is not a promise that every approved borrower receives $40,000. USDA limits the loan to the amount supported by the repair need, property rules, available security, and the applicant’s ability to make the payment.

These are rounded estimates for a fully amortized 20-year loan at 1%. They do not include taxes, property insurance, flood insurance, escrow amounts, title work, appraisal costs, or other approved expenses that may affect the transaction.

The Section 504 grant

The grant is not a loan with monthly payments, but it has strict limits. The applicant must be at least 62 years old when applying. Grant funds may be used only to remove identified health and safety hazards or make the home accessible and usable for a household member with a disability. The regular lifetime maximum is $10,000.

Age 62 does not guarantee a grant. The applicant must meet all other rules, and the repair must have an eligible grant purpose. USDA’s current handbook says grant funds may be used first up to the lifetime limit; repayment ability is calculated if a loan is still needed. The applicant also signs a repayment agreement. Under federal grant rules, the full grant must be repaid if the property is sold less than three years after the agreement is signed.

A loan and grant may be combined

An eligible older homeowner may receive a grant and then a loan for remaining approved costs. The regular combined maximum is $50,000. The loan portion still requires repayment ability and monthly payments.

Who may qualify

USDA applies several screens at the same time. Meeting one rule does not replace the others. The main rules appear in 7 CFR 3550.103.

• You own and occupy the home. It must be where you live, not a rental, second home, or investment property.
• The property is in an eligible rural area. Use the USDA address tool for screening. The local office makes the final decision.
• Your adjusted household income is within the very-low-income limit. The limit changes by county or area and household size.
• You cannot obtain affordable help elsewhere. USDA also checks whether you have enough personal resources to pay for the work.
• For a loan, your budget supports repayment. USDA reviews credit history and federal debt issues.
• For a grant, the applicant is at least 62 when applying.
• You do not own and live in the home. Renters and landlords do not qualify through this owner-occupant program.
• The project is mainly cosmetic or luxury work. Section 504 is not a room-addition or decorating program.

Income limits are local

USDA uses adjusted household income, not one national dollar cap. Check the current table for the property’s county or income area and household size. Do not rely on an old article or a rough percentage of area median income.

The FY 2026 income limits were revised July 13, 2026. Select the state and find the “VERY LOW INCOME” row. Ask the local office to calculate income because household members and allowed deductions can change the result.

Assets and credit can matter

Federal rules generally require an elderly family to use countable assets above $20,000 to reduce the request. The threshold is $15,000 for a non-elderly family. The current handbook focuses on non-retirement assets that can be converted to cash within 60 days; the home and a minimum adequate site are excluded. Ask USDA to calculate this for your case.

Loan applicants must show a reasonable ability and willingness to repay. Recent serious delinquencies, unresolved tax liens, federal debt, foreclosure, or collections can affect approval. USDA must state the reason and source when it rejects a loan for unacceptable credit.

What repairs may be approved

Loan funds have a wider purpose than grant funds. The repair-use regulation allows loans for general repairs, improvements, modernization, or hazard removal. Grants are limited to removing hazards or making the home accessible and usable for a household member with a disability.

Approved work may include roof or structural repairs; unsafe electrical, plumbing, sewage, well, or heating work; accessibility changes; hazard removal; and certain energy improvements. Some reasonable title, legal, design, appraisal, survey, closing, utility-connection, or approved nonprofit packaging costs may also qualify.

A roof may qualify as part of an approved plan, but there is no automatic USDA roof grant. Our roof repair guide compares other paths.

Work USDA generally cannot fund

• Building a new dwelling.
• Repairs that would still leave major hazards.
• Moving a manufactured home under regular Section 504 rules.
• Most off-site work, except allowed utility costs.
• Old repair debt, except limited utility costs allowed by regulation.
• For-profit application referral or packaging fees.

Manufactured homes have stricter rules

The applicant generally must own both the home and site, have occupied the home before applying, and use the work to remove hazards. The home must be on a permanent foundation or be placed on one with Section 504 funds.

Renting the lot, missing title papers, inherited ownership, or family-owned land can block approval. Ask USDA before paying for estimates. Our manufactured-home repair guide explains other options.

How to apply for Section 504 help

USDA’s intake form packet is useful for the first review. The local office can tell you whether it accepts email, mail, drop-off, or another submission method. For general preparation help, see our application guide.

Documents to gather

The exact packet varies. USDA’s Attachment 12-E checklist commonly asks for:

• Photo ID and proof of age for a grant applicant.
• Requested identification, release, employment, and asset forms for adults.
• Pay stubs, benefit letters, tax returns, bank statements, and other income or asset proof.
• Explanations for employment gaps, irregular income, or credit problems.
• Deed or title, tax assessment, mortgage statement, and insurance records.
• Repair photos, itemized bids, and contractor license information when required.
• Medical, disability, childcare, or student records when relevant.

The checklist says USDA may give 15 days for many missing items and 30 days for repair bids before treating an incomplete file as withdrawn. Follow the deadline in your notice. Ask for more time in writing before it expires when a record cannot be obtained quickly.

Our document checklist guide explains how to organize the packet.

What happens after you apply

USDA verifies the file, income, assets, ownership, occupancy, rural location, repair eligibility, and repayment ability when a loan is involved. A USDA employee or authorized person may inspect the property and review the work scope.

The office may require bids, contractor credentials, permits, environmental review, lead-safe work, floodplain review, or other steps. USDA may approve the contractor and inspect completed work before final payment.

Processing is not instant. The national page says approval depends on local funding. Staff workload, inspections, bids, or a funding shortage can also slow the case.

Mortgage, lien, insurance, and grant repayment rules

The low interest rate does not make the loan risk-free. Read every closing paper. USDA’s current field office handbook explains several important thresholds:

• Mortgage security: When total Section 504 loan debt is $7,500 or more, USDA generally takes a mortgage or deed of trust. USDA does not always have to be in first position.
• Full title service: It is required when total outstanding Section 504 loan debt is more than $25,000.
• Property value: For a secured loan, total debts against the property generally cannot exceed its value, except certain allowed costs.
• Hazard insurance: USDA generally requires hazard insurance when the Section 504 loan debt is more than $15,000.
• Flood insurance: It may be required for substantial improvement in a Special Flood Hazard Area.
• Escrow: USDA may require an escrow account for taxes and insurance when those costs are not already escrowed through another lender.
• Grant agreement: The full grant is repayable if the property is sold within three years.

A mortgage or deed of trust gives USDA a legal security interest in the property. Missing loan payments can create serious consequences. A grant repayment agreement is different from a 20-year loan, but it still matters if the homeowner plans to sell or transfer the property soon. Read our guide to liens and recapture before signing any repair assistance agreement you do not understand.

How Section 504 works after a disaster

Two USDA disaster paths are easy to confuse.

Higher regular Section 504 limit

For qualifying repairs in a presidentially declared disaster area, USDA currently lists a $15,000 grant maximum and $55,000 combined maximum. Regular Section 504 eligibility still applies, including very-low income, rural location, ownership and occupancy, and age 62 for a grant.

Separate Disaster Assistance Fund

USDA also has a Disaster Assistance Fund. As of July 28, 2026, it is open through September 30, 2026, subject to funds. It can serve qualifying very-low- and low-income homeowners affected by certain federal, secretarial, or governor-declared disasters. The current maximum grant is $32,420.

This separate fund may allow eligible pre-application disaster costs, site preparation, or moving a manufactured home. It bars duplication with insurance, FEMA, or other benefits. Ask the specialist to screen you for both paths.

If USDA denies, delays, or cannot fund the repair

Ask for the reason in writing. A denial may involve income, location, ownership, occupancy, credit, repayment ability, assets, property condition, an ineligible repair, or missing documents. A funding delay is different from an eligibility denial.

Read the notice immediately. USDA decisions generally explain review or appeal rights. A National Appeals Division request normally must be received within 30 calendar days after the participant first receives the adverse decision. Follow the deadline and address in your letter. The NAD filing guide explains the process.

If title, heirs’ property, a lien, foreclosure, or a contractor dispute is blocking the case, use the legal aid finder.

Backup programs

Local programs may be grants, deferred loans, forgivable loans, or managed repair services. Our home repair overview and where-to-start guide explain the main paths.

For safer borrowing choices, see our repair loan guide.

A practical action plan