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USDA Rural Housing Programs: An Overview

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Abstract:

Title V of the Housing Act of 1949 authorized the Department of Agriculture (USDA) to make loans to farmers to enable them to construct, improve, repair, or replace dwellings and other farm buildings to provide decent, safe, and sanitary living conditions for themselves or their tenants, lessees, sharecroppers, and laborers. USDA was also authorized to make grants or combinations of loans and grants to those farmers who could not qualify to repay the full amount of a loan, but who needed the funds to make the dwellings sanitary or to remove health hazards to the occupants or the community.

While the act was initially targeted toward farmers, over time the act has been amended to enable USDA to make housing loans and grants to rural residents in general. Currently, the USDA housing programs are administered by the Rural Housing Service (RHS). The housing programs are generally referred to by the section number under which they are authorized in the Housing Act of 1949, as amended.

The rural housing programs include loans for the purchase, repair, or construction of single-family housing; loans and grants to remove health and safety hazards in owner-occupied homes; loans and grants for the construction and purchase of rental housing for farmworkers; loans for the purchase and construction of rental and cooperative housing for the elderly and for rural residents in general; rental assistance payments to make rental housing more affordable; interest subsidies to make homeownership loans more affordable and to enable production of rental housing that is affordable for the target population; and loans for developing building sites upon which rural housing is to be constructed.

In the 109th Congress, H.R. 3715 and S. 3616 would have amended the Internal Revenue Code of 1986 to provide that the gain from the sale of certain federally or state-assisted multifamily rental housing would not be counted as income, provided that the property were sold to an entity that agreed to maintain the affordability and use restrictions on the property for 30 years. H.R. 5039 would have provided for the revitalization of rural rental housing stock under the Section 515 housing program. Other than hearings on H.R. 5039, no action was taken on the bills. All three bills attempted to address longstanding concerns that owners of some RHS-financed multifamily housing may prepay their loans and convert their properties to uses other than rental occupancy by low- and moderate-income families. Keeping federally assisted housing available for use by low- and moderate-income occupants is referred to as housing preservation.

This report will be updated as deemed necessary.