Financing Emergency Home Repairs with a Section 504 Home Repair Loan

( – Adequate housing is a fundamental right for all Americans. But maintaining and repairing a home, especially in the rural areas, without funding can be challenging. Section 504 Home Repair Loans offer help to such homeowners.

What Is Section 504 Home Repair Loan?

Section 504 Home Repair Loans, also called Single-Family Housing Repair Loans & Grants, are under the  USDA Rural Development Department. The loans are available to the elderly and very low-income families for three primary purposes:

  • Eliminate safety and health hazards in a home
  • Make the home accessible to disabled residents
  • Make the home energy efficient

Section 504 falls under two categories:

Section 504 Loans

These loans provide financing for projects involving removing safety and health hazards from a home and modernizing it by making it accessible for disabled persons and making the home energy efficient.

You can receive a maximum of $40,000 with a 20-year repayment period at a 1% interest rate. However, if your outstanding loan amount is over $25,000, you must have a full title service.

Section 504 Grants

While you don’t have to pay back a Section 504 grant, you can only get up to $10,000 with limited use.

Unlike the loan, a Section 504 grant can only be used to remove safety and health hazards from a home.

It’s important to know that if you sell your home within three years after receiving a Section 504 grant, you must reimburse it in full.

Who Qualifies for Section 504?

The USDA provides Section 504 home repair loans to the elderly and very-low-income homeowners (50% of the area median income). To qualify for this program, the applicant must be:

  • The occupant and homeowner
  • Unable to access affordable financing elsewhere
  • Aged 62 or older and unable to repay a home repair loan, to receive a grant
  • Have a household income not more than the very low limit by area

Visit the USDA Eligibility Locator to determine whether your location qualifies.

The Application Process

If you need a Section 504 home repair loan, follow these steps:

  1. Check the USDA website to confirm if your home qualifies for the program
  2. Print and fill out the relevant forms
  3. Contact a USDA agent dealing with Section 504 loans for further instructions.

The Bottom Line

Section 504 Home Repair Loans provide an easy, affordable and effective way to repair, maintain, and upgrade a home. It’s an all-year-round program to accommodate rural homeowners struggling with home repair financing, even with low credit limits. Check the USDA Online Portal for more information on the loan program.

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