Mortgage Navigator • USDA Home Loans

USDA Section 502 Direct Loan

Direct is a government-made loan with a different mission and structure from the lender-originated Guaranteed program.

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Who it serves

USDA says the Direct program serves low- and very-low-income applicants who are unable to obtain reasonable financing from other resources.

Payment assistance

Payment assistance can reduce the borrower's mortgage payment. USDA states the effective rate can be reduced as low as 1% in qualifying cases.

Terms

USDA currently describes terms up to 33 years, with up to 38 years for certain very-low-income applicants who cannot afford the 33-year payment.

Subsidy recapture: Direct borrowers may have to repay all or part of payment assistance when title transfers or the borrower stops occupying the home, subject to USDA rules.

Official USDA baseline

USDA Direct Home Loans · HB-1-3550 Direct Handbook

USDA rules and income/property eligibility can change. The current USDA eligibility site, handbook, GUS result and approved lender requirements control the actual transaction.