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**[Section 504 Rural Home Repair Loans And Grants]{.underline}**

*USDA Rural Development Section 504 loans and/or grants are available to
assist eligible, very low income, homeowners with repair of their home,
located in rural areas. Repairs may be made to improve or modernize the
home, to make it safe, sanitary, or to remove health and safety hazards.
Grants are only available for repairs that remove health or safety
hazards.*

**Loan And Grant Purposes**

Section 504 grant funds may be used only to pay costs for repairs and
improvements which will remove identified health or safety hazards. Loan
funds may be used to improve or modernize dwellings regardless of the
removal of health or safety hazards. Dwellings repaired with loan or
grant funds need not be brought to agency development standards or
thermal performance standards, nor must all of the existing hazards be
removed provided the dwelling does not continue to have major health or
safety hazards after the planned repairs are made.

Authorized loan and grant purposes include but are not limited to the
following:

-   Installation or repair of sanitary disposal systems, together with
    related plumbing and fixtures, which will meet local health
    department requirements.

-   Payment of reasonable connection fees, which may include assessments
    for utilities (i.e. water, sewer, electricity or gas) which are
    required to be paid by the applicant and which cannot be paid from
    other funds.

-   Energy conservation measures such as:

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-   Insulation.

-   Combination screen-storm windows and doors.

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-   Repair or replacement of heating system.

-   Electrical wiring.

-   Repair or replacement of roof.

-   Replacement of deteriorated siding.

-   Payment of incidental expenses such as surveys, title clearance,
    loan closing and architectural or other technical services.

-   Necessary repairs to mobile/manufactured homes provided:

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-   The applicant owns the home and site and has occupied the home prior
    to filing an application with USDA Rural Development.

-   The mobile/manufacture home is on a permanent foundation or will be
    put on a permanent foundation with Section 504 funds. A permanent
    foundation will be either:

1.  A full below grade foundation, or

2.  A home on blocks, piers or similar foundation with skirting and
    anchoring tie-downs.

-   The mobile/manufactured home is in need of repairs to remove health
    or safety hazards.

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-   Additions to dwellings with grant funds (conventional, manufactured
    or mobile) only when it is clearly necessary to remove health or
    safety hazards to the occupants.

-   Repair or remodel houses to make accessible and usable for
    handicapped or disabled persons.

-   Other necessary repairs or replacement.

-   Payment of application packaging fees under certain conditions.

**Maximum Loan Or Grant**

-   Maximum assistance outstanding to any individual for initial or
    subsequent Section 504 loans may not exceed \$20,000.

-   Lifetime assistance to any individual for initial or subsequent
    Section 504 grants may not exceed a cumulative total of \$7,500.

**Limitation On Use Of Loan/Grant Funds**

Section 504 loan or grant funds may not be used to:

-   Assist in the construction of a new dwelling.

-   Make repairs to a dwelling of such poor condition that when the
    repairs are completed, the dwelling will continue to be a major
    hazard to the safety and health of the occupants.

-   Move a mobile/manufactured home from one site to another.

-   Refinance any debt or obligation of the borrower/grantee.

**Limitation On Use Of Grant Funds**

In addition, Section 504 grant funds may not be used to make changes to
the dwelling for cosmetic or convenience purposes, unless the work is
directly related to the removal of hazards. Cosmetic and convenience
changes may include, but are not limited to:

-   Painting.

-   Paneling.

-   Carpeting.

-   Improving clothes closets or shelving.

-   Improving kitchen cabinets.

-   Air conditioning.

-   Landscape plantings.

**Eligibility Requirements**

Section 504 applicants must meet the following requirements:

-   A citizen of the United States.

-   Posses legal capacity to incur the loan obligation.

-   Owner and occupant of the dwelling to be repaired.

-   Have an adjusted annual income that does not exceed the "very low
    income" limit as set by USDA Rural Development.

-   Have a favorable credit history.

-   Be unable to obtain the needed credit from other sources.

-   Be unable to remove the safety or health hazards by utilizing
    personal resources.

-   Have adequate repayment ability.

-   For a Section 504 grant only:

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-   At least 62 years of age.

-   Lack repayment ability for a loan.

**Evidence Of Ownership**

Applicants must submit evidence of ownership of property to be improved.

**Rates And Terms**

-   The interest rate for all Section 504 loans is one (1) percent per
    annum.

-   Loan terms will not exceed 20 years and should be based on the
    borrower's repayment ability.

**Application**

Application for Section 504 assistance will be made on Form RD 410-4,
"Application for Rural Assistance (non-farm tract) Uniform Residential
Loan Application," which are available at local USDA Rural Development
offices.

**Family Budget**

Form RD 1944-3, "Budget and/or Financial Statement", will be prepared by
all Section 504 applicants. When determining repayment ability, the
budget will consider and account for items such as:

-   Non-cash benefits (food stamps, scholarships, free clothing, meals
    on wheels, free transportation, etc.) which help reduce the
    applicant's budgeted expenses.

**Credit Investigation**

Credit reports, at no expense to the applicant, are required for loans
exceeding \$7,500.

**Verification Of Income**

Income from employment will be verified by use of Form

RD 1910-5, "Request of Verification of Employment". Social Security
(SS), Supplemental Security Income (SSI), social services, pension and
other similar sources are included as income.

**Cost Estimates**

Written cost estimates will be required for all work to be performed.

U.S. Department of Agriculture

Rural Development - Rural Housing Service

(Revised December 2007)

National Office Web Site: http://www.rurdev.usda.gov

South Dakota Web Site: <http://www.rurdev.usda.gov/sd>/

South Dakota State Office Telephone Number: (605) 352-1100

South Dakota State Office Facsimile Number : (605) 352-1146

South Dakota State Office TDD Number : (605) 352-1147

E-Mail Address: tammi.schone@sd.usda.gov

*The U.S. Department of Agriculture (USDA) prohibits discrimination in
all its programs and activities on the basis of race, color, national
origin, age, disability, and where applicable, sex, marital status,
familial status, parental status, religion, sexual orientation, genetic
information, political beliefs, reprisal, or because all or part of an
individual\'s income is derived from any public assistance program. (Not
all prohibited bases apply to all programs.) Persons with disabilities
who require alternative means for communication of program information
(braille, large print, audiotape, etc.) should contact USDA's TARGET
Center at (202) 720-2600 (voice and TDD). To file a complaint of
discrimination, write to USDA, Director, Office of Civil Rights, 1400
Independence Avenue, S.W. Washington, D.C. 20250-9410, or call (800)
795-3272 (voice), or (202) 720-6382 (TDD). "USDA is an equal opportunity
provider, employer, and lender." (RHS-3)*