Section 538 Rural Rental Housing Guaranteed Loans
Department Of Agriculture, Rural Housing Service
This program has been designed to increase the supply of affordable multifamily housing in rural areas through partnerships between Rural Development and major lending sources, as well as State and local housing finance agencies and bond insurers. The program provides Federal credit enhancement to encourage private and public lenders to make new loans for affordable rental properties that meet program standards.
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Helps private lenders finance affordable rental housing for low- and moderate-income families in rural areas. Provides loan guarantees of up to 90% for these projects.
Quick Facts
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What Is This Program?
What Benefits Are Offered?
Provides loan guarantees to qualified private-sector lenders for financing to eligible borrowers to increase the supply of affordable rental housing for low- and moderate-income individuals and families in eligible rural areas and towns. The Agency offers guarantees of up to 90% of the loan amount; for-profit entities may borrow up to 90% and non-profit entities may borrow up to 97% of the total development cost or appraised value (whichever is less). Funds can be used for construction, improvement, and purchase of multi-family rental housing, buying and improving land, and providing necessary infrastructure. Loan terms range from a minimum of 25 years to a maximum of 40 years, with interest rates negotiated between the lender and borrower, fixed for the life of the loan guarantee.
Who Is Eligible?
Industries: real estate, housing development
Region: eligible rural areas, eligible towns, federally-recognized tribal lands, United States
Other Criteria: Qualified private-sector lenders approved and active in Fannie Mae, Freddie Mac, Ginnie Mae, HUD, Federal Home Loan Bank members, or State/local housing finance agencies (for lenders), State or local governmental entities, nonprofit organizations, for-profit organizations (including LLCs), or Federally-recognized Tribes (for borrowers), Projects building or preserving affordable rural rental housing, Complexes must consist of at least five units, Rent for individual units is capped at 30% of 115% area median income, Average rent for an entire project (including tenant paid utilities) cannot exceed 30% of 100% of area median income, adjusted for family size, Housing units must serve low- to moderate-income families or individuals (initial occupancy income cannot exceed 115% of the area median income adjusted for family size)
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📋What Are the Application Steps & Timeline?
- 📝Steps to Apply
- Email 538Application@usda.gov to request a shared folder in CloudVault.
- Provide project details in the email.
- Wait for the shared folder to be created (within 2 business days).
- Upload all required documents to the shared folder.
- Email 538Application@usda.gov to notify that documents are uploaded.
- 🌐Application Portal
- https://www.rd.usda.gov/programs-services/multi-family-housing-loan-guarantees
- 📤Submission Method
- 🔄Intake Type
- continuous
📄What Documents Are Required?
- ✅Required Documents
- SF-424 (Application for Federal Assistance)
- SF-424A (Budget Information - Non-Construction)
- SF-424B (Assurances)
- Project Narrative
- Budget Narrative
- Indirect cost rate agreement
- Environmental review
- 📐Format Requirements
- Each application document must be uploaded as its own single, separate file. A ZIP file containing individual, separate application documents is also acceptable.
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💰What Expenses Are Eligible?
- 🧾Eligible Expenses
- Construction of multi-family rental housing
- Improvement of multi-family rental housing
- Purchase of multi-family rental housing
- Buying and improving land
- Providing necessary infrastructure
- 💳Payment Model
- mixed
🤝Is Matching Funding Required?
- 🔀Matching Required
- Yes
- 📊Matching Ratio
- 10% for-profit, 3% for nonprofit
- 🏦Eligible Matching Sources
- cash
- in-kind
- 📚Stacking Rules
- Cumulative government assistance is allowed
- 🛡️Proof of Matching Required
- Documentation of equity contribution required
📊What Are the Reporting Requirements?
- 🗓️Reporting Frequency
- annual
- 📑Reporting Requirements
- SF-425 Federal Financial Report
- performance progress report
- 🔍Audit Requirements
- OMB Uniform Guidance Single Audit if the recipient expends $750,000 or more in federal awards.
- 📢Branding Requirements
- Acknowledgment of federal funding is required.
- 🗄️Record Retention Period
- 3 years post-final-report
How Do I Apply?
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FAQFrequently Asked Questions
Visit the program page for detailed eligibility requirements.
This program offers funding up to $9,999,999,999 (minimum $56,000).
This program accepts applications on a rolling basis.
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