Together, America Prospers

Multifamily Guaranteed Rural Rental Housing

What does this 

program do?

USDA Rural Development provides 

up to a 90 percent guarantee 

for loans made by commercial 

lenders to borrowers developing 

or rehabilitating multifamily rental 

housing for low- and moderateincome tenants in rural areas. 

Program Features

Loan Amount

The principal obligation is limited 

to maximum per-unit limits under 

Section 207(c) of the National 

Housing Act (available at this 

link: https://go.usa.gov/xe5dn). 

Loan-to-value limit for a nonprofit 

cannot exceed 97 percent, 

and for-profit entities cannot 

exceed 90 percent of the 

development costs.

Guarantee Types

The agency offers three loan 

guarantee options:

• Option One: Permanent Loan 

guarantee. The Agency 

guarantees the permanent 

financing only.

• Option Two: Construction 

and Permanent guarantee. 

The agency guarantees 

construction advances and 

permanent financing once 

regulatory requirements have 

been met. 

• Option Three: Single Continuous 

guarantee for construction and 

permanent financing. Projects 

that have a loan-to-cost ratio of 

70 percent or lower are eligible 

for this guarantee. 

Borrower’s Equity

For-profit: must provide at least 

10 percent equity

Nonprofit: must provide at least 

3 percent equity

Interest Rate

Fixed rate negotiated between 

lender and borrower.

Loan Terms

Minimum: 25 years

Maximum: 40 years

Eligible Lenders 

• Lenders must demonstrate multifamily 

lending experience and the capacity 

to successfully carry out all aspects 

of loan processing and asset 

management, including disposition 

and liquidation.

Eligible Borrowers

• Nonprofit and for-profit corporations

• Individuals, partnerships, and trusts

• Most state and local 

governmental entities

• Federally-recognized Tribes

Tenant Requirements

• Tenant income cannot exceed 

115 percent of the area median 

income adjusted for family size.

• Rent for individual units is capped 

at 30 percent of 115 percent of the 

area median income, adjusted for 

family size.

• To ensure the project remains 

affordable, the average rent for an 

entire project (including tenant-paid 

utilities) cannot exceed 30 percent 

of 100 percent of the area medium 

income, adjusted for family size.
Multifamily Guaranteed Rural 

Rental Housing

What governs this program?

• Code of Federal Regulation, 7 CFR 

Part 3565, available at this link: 

https://go.usa.gov/xMfcA

• Origination and Servicing Handbook, 

HB-1-3565, available at this link: 

https://www.rd.usda.gov/files/HB-1-

3565.pdf

• This program is authorized 

by Title V of the Housing Act 

of 1949, available at this link: 

https://go.usa.gov/xMwFR

For More Information

Please contact Multifamily Housing 

toll-free at 800-292-8293 or visit 

https://www.rd.usda.gov/multifamily

and scroll to the bottom of the page to 

find your processing and review branch, 

based on the state in which your project 

is located. 

NOTE: Because citations and other information may be subject to change, 

please always consult the program instructions listed in the section above titled 

“What Governs This Program?” You may also contact our Multifamily Housing staff

for assistance. You will find additional forms, resources, and program information at 

rd.usda.gov. USDA is an equal opportunity provider, employer, and lender.

December 2021