USDA Rural Development Area 4 is accepting applications for the Section 502 Direct Loan Program!

This program assists low- and very-low-income applicants obtain decent, safe and sanitary housing in eligible rural areas by providing payment assistance to increase an applicant’s repayment ability. Payment assistance is a type of subsidy that reduces the mortgage payment for a short time. The amount of assistance is determined by the adjusted family income.

Who: low and very low-income households in Illinois who wish to purchase a home of their own.

What: 100% financing-33 year term-3% interest rate that may be subsidized for qualified applicants.

When: Rural Development accepts applications year-round.

Where: Rural Areas with populations 20,000 or less. Apply at any Rural Development location. The Quincy office is located at 338 S. 36th Street, Quincy, IL.  62301 phone number is 217-224-9307 ext. 4.

Why: You will have a sense of stability, security, and pride of ownership.
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Who may apply for this program? A number of factors are considered when determining an applicant’s eligibility for Single Family Direct Home Loans. At a minimum, applicants interested in obtaining a direct loan must have an adjusted income that is at or below the applicable low-income limit for the area where they wish to buy a house and they must demonstrate a willingness and ability to repay debt.
Applicants must:

• Be without decent, safe and sanitary housing
• Be unable to obtain a loan from other resources on terms and conditions that can reasonably be expected to meet
• Agree to occupy the property as your primary residence
• Have the legal capacity to incur a loan obligation
• Meet citizenship or eligible noncitizen requirements
• Not be suspended or debarred from participation in federal programs

Properties financed with direct loan funds must:

• Generally, be 2,000 square feet or less
• Not have market value in excess of the applicable area loan limit
• Not have in-ground swimming pools
• Not be designed for income-producing activities

Borrowers are required to repay all or a portion of the payment subsidy received over the life of the loan when the title to the property transfers or the borrower is no longer living in the dwelling.
Applicants must meet income eligibility for a direct loan.  Please select your state from the dropdown menu above.
What is an eligible area? Generally, rural areas with a population of less than 35,000 are eligible.  Visit the USDA Income and Property Eligibility website for complete details.
How may funds be used? Loan funds may be used to help low-income individuals or households purchase homes 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 much may I borrow?
Using the Single-Family Housing Direct Eligibility Assessment tool, potential applicants may enter information online to determine if the Section 502 Direct Loan Program is a good fit for them prior to applying.  The tool will provide a preliminary eligibility determination after a potential applicant enters information on their general household composition, monthly income, monthly debts, property location, estimated property taxes, and estimated hazard insurance.  Potential applicants are welcome to submit a complete application for an official determination by USDA Rural Development (RD) regardless of the eligibility assessment results.  Upon receipt of a complete application, RD will determine the applicant’s eligibility using verified information and the applicant’s maximum loan amount based on their repayment ability and the area loan limit for the county in which the property is located. 
What are the interest rate and payback periods?

• Fixed interest rate based on current market rates at loan approval or loan closing, whichever is lower
• Interest rate when modified by payment assistance, can be as low as 1%
• Up to 33 year payback period - 38 years payback period for very low-income applicants who can’t afford the 33-year loan term

How much down payment is required? No down payment is typically required. Applicants with assets higher than the asset limits may be required to use a portion of those assets.
Is there a deadline to apply? Applications for this program are accepted through your local RD office year-round.
How long does an application take? Processing times vary depending on funding availability and program demand in the area in which an applicant is interested in buying and completeness of the application package.
What governs this program?

• The Housing Act of 1949 as amended, 7 CFR, Part 3550,
• HB-1-3550 - Direct Single Family Housing Loans Field Office Handbook

Why does USDA Rural Development do this? USDA Rural Development’s Section 502 Direct Loan Program provides a path to homeownership for low- and very-low-income families living in rural areas, and families who truly have no other way to make affordable homeownership a reality. Providing these affordable homeownership opportunities promotes prosperity, which in turn creates thriving communities and improves the quality of life in rural areas.


Apply at any Rural Development location. The Quincy office is located at 338 S. 36th Street, Quincy, IL.  62301 phone number is 217-224-9307 ext. 4.