Section 515 Rural Rental Housing

How It Works

The Section 515 Rural Rental Housing Program provides competitive mortgage loans to provide multifamily rental housing for very low-, low-, and moderate-income families, elderly persons and persons with disabilities. The Section 515 program is administered by the U.S. Department of Agriculture (USDA).

Loans are for up to 30 years at a effective 1% interest rate. Tenants pay basic rent or 30% of adjusted income, whichever is greater. A rental assistance subsidy can be used to limit tenant payments to 30% of their income.

History

The Section 515 Rural Rental Housing Program was created in 1962 when Congress amended Title V of the Housing Act of 1949.

Policy Update

As the nation faces serious budget challenges, funding for low-income housing is also facing significant cuts. Beginning in fiscal year 2005, the President proposed, and Congress enacted, significant cuts in low-income housing assistance. For fiscal year 2006, the amount of funding approved by Congress for affordable housing and community development programs in HUD was nearly $3.3 billion below the 2004 level, adjusted for inflation. These funding cuts are already affecting low-income families. In fiscal year 1994, the Rural Rental Housing Program funded the development of 11,542 units of affordable housing in rural areas. In FY 2005, only 783 units were developed.

In addition, these cuts are being made at the worst possible time. In the past 6 years, Congress has recycled $13 billion of previously appropriated but unspent HUD funds back into HUD programs. This has significantly reduced the amount of new appropriations needed. However, there is reason to believe that unspent funds available for recycling are drying up and Congress will soon have to start providing additional new funding each year just to keep total funding at its current level. Funding increases will also be needed in the next few years to renew long-term contracts HUD has signed with private owners of approximately 300,000 units to make these units affordable to low-income tenants.

Links

Housing Assistance Council

U.S. Department of Agriculture Rural Development

References

Housing Assistance Council. Housing in Rural America. March 2006. Available at: http://www.ruralhome.org/manager/uploads/HousinginRuralAmerica_2.pdf. Accessed on February 8, 2007.

Housing Assistance Council. Rural Rental Housing Loans (Section 515). June 2006. Available at: http://www.ruralhome.org/manager/uploads/RD_515_Rental.pdf. Accessed on February 8, 2007