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 looking to upgrade their homes.

But don’t start drawing up plans for a first-floor extension right away: 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 loans or grants can be used for.

What is the Section 504 Home Repair program?

The Section 504 Home Repair program, also known as Single Family Housing Repair Loans & Grants, offered by the US Department of Agriculture Rural Development was set up to provide financial assistance to low-income homeowners so they can repair, improve or modernize their homes. The program also helps senior and low-income homeowners eliminate health and safety risks in their homes.

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

  • Bringing your home up to health and safety standards (e.g. projects involving the roof, foundation, or electrical and water systems)
  • Make your home accessible to residents with disabilities (eg, add ramps and rungs)
  • Make your home more energy efficient (e.g., insulation, energy conservation education, furnace repair and replacement, and heating duct upgrades)

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 repay a grant, but before you receive funds, you must sign an agreement that states that if you sell your home that was repaired with a Section 504 grant within three years, the full amount must be reimbursed. .

Who is eligible for the Section 504 Home Repair program?

Grants and loans are awarded based on criteria established 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 household income below 50% of the area median income. At least one person living in the household must be aged 62 or over 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 starting any paperwork, you should consult with 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 submitting them.

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