USDA Loans

Program Overview

USDA 502 Direct Home Loans are primarily used to help low-income individuals or households purchase homes in rural areas. Funds can be used to build, repair or to renovate a home, or to purchase and prepare sites, including providing water and sewage facilities.

What are the Terms?

Loans are for up to 33 years and sometimes 38 years for those with lower incomes. The interest rate is very competitive.

Who is eligible?

Applicants for the 502 Direct Loan must have low or very low income which is determined by several factors. The best way to be sure if someone is eligible is to ask a home ownership specialist. This can be done by email, over the phone, or in person. Direct loans like other mortgage loans include principle, interest, taxes and in­surance in the monthly house payment. The purchaser's payment cannot be over 29 percent of their gross monthly income. This helps to make sure the payment is affordable.


What are the benefits?

  • No down payment

  • 100% financing

  • Offers payment assistance to those who qualify

  • Taxes and insurance are escrowed with monthly pay­ment

  • No Private Mortgage Insur ance (PMI)

  • No credit score required

How to qualify?

  • Must have stable and dependable income which is sufficient to repay the loan

  • Gross household income should be within agency in come limits

  • Must have acceptable credit history. We can assist you with reviewing and improving your credit.

  • Purchased home is the primary residence

  • Must be legal age to incur loan obligation

  • Be a U.S citizen or have permanent resident alien

What are the standards?

Under the section 502 Direct Loan program, housing must be modest in size, (no more than 1,800 living sq ft) design and cost. Modest housing is property that is considered modest for the area, does not have market value in excess of the applicable area limit, and does not have certain prohibited features.

Houses constructed, purchased, or rehabilitated must meet the voluntary national model building code adopted by the state and HCFP thermal and site standards.

NECAC is a HUD Certified Home Ownership Counseling Agency

Counselors can provide information on:

  • Prepurchase Counseling

  • Post Purchase Follow Up

  • Home Ownership Classes

  • Down Payment Assistance (St. Louis County, St. Charles City and County, City of O'Fallon, and City of Florissant only)

  • Credit Counseling

  • USDA 502 Direct Loan

  • Foreclosure Prevention and Loan Modification

  • Financial Literacy


More Information


Amanda Smith


Home Ownership Programs
PO Box 470
Bowling Green MO 63334