What Is Section 504? Home Improvement Grants and Loans

In the interest of keeping Americans in good-quality homes, the government created the Section 504 Home Repair program. This initiative provides money in the form of loans and grants to qualified homeowners who are looking to modernize their homes.

But don’t start drawing up the plans for a first-story extension just yet: A Section 504 loan or grant can only be used for very specific home improvements.

Let’s take a closer look at this government-sponsored home improvement program and how homeowners can participate—and what the loans or grants can be used for.

What is the Section 504 Home Repair program?

The Section 504 Home Repair program, also known as the Single Family Housing Repair Loans & Grants, offered by the U.S. Department of Agriculture Rural Development was set up to provide financial aid to low-income homeowners so they can repair, improve, or modernize their homes. The program also helps elderly and low-income homeowners remove health and safety hazards from their homes.

While you might want to jump at the chance to get a home improvement grant for a kitchen update or extra bedroom, you’d be advised to put those HGTV fantasies aside for the time being. This grant can only be applied to specific types of core projects that fall into three main categories:

  • Bringing your home up to health and safety standards (e.g., projects involving the roof, foundation, or electric and water systems)
  • Making your home accessible for residents with disabilities (e.g., adding ramps and bars)
  • Making your home more energy-efficient (e.g., insulation, energy conservation education, furnace repair and replacement, and heating duct improvements)

How much money can you receive, and do you have to pay it back?

The maximum loan amount is $20,000 and the maximum grant amount has a lifetime limit of $7,500. The loan can be repaid over 20 years, and the interest rate is fixed at 1%.

You don’t have to pay back a grant, but before you’re given any funds, you must sign an agreement that says if you sell your home that’s been repaired with a Section 504 grant within three years, the full amount must be repaid.

Who qualifies for the Section 504 Home Repair program?

Grants and loans are given out based on criteria set and evaluated by the USDA. To qualify for the program, you must own and occupy your home, be unable to obtain credit elsewhere, or have a family income below 50% of the area’s median income. At least one person living in the household must be age 62 or older and unable to repay a repair loan.

How do I apply for the Section 504 Home Repair program?

First, visit the USDA website to determine if you are eligible. Before you begin any paperwork you should consult a USDA home loan specialist in your state. The specialist can help you with the application and answer any questions you have about the process. These loans and grants are available year-round, and there is no deadline for filing.

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