King, Curtis Lead Bipartisan Letter Urging Administration to Reverse Course on New Policy Limiting Path to Homeownership

WASHINGTON, D.C. - U.S. Senator Angus King (I-ME) and John Curtis (R-UT) are pressing the Trump Administration to reverse course on its decision to limit the path to home ownership for rural Americans. In a bipartisan letter to United States Department of Agriculture (USDA) Secretary Brooke Rollins, the Senators asked that recent updates limiting additional access to the Rural Development Section 502 Direct Loan program are rescinded. Unfortunately, the new revisions drastically reduce the loan limits and add in new layers of administrative complexity.

The Senators began, "The Section 502 Direct Loan program administered by the Department has been instrumental in this success, financing homes for millions of families across the country. This program has also helped incentivize housing development in the rural communities that need it most. Unfortunately, the revisions issued to the handbook on February 10, 2026, PN655, severely curtail program eligibility and make it more difficult for non-profit partners to place rural families in homes."

"One of the most concerning changes is the reduction of Section 502 loan limits from 80 to 60 percent of the U.S. Department of Housing and Urban Development Section 203(b) limit," they continued in the letter. "This revision is coupled with another that prohibits loans from being issued when the appraised value of the house exceeds the loan limit. For families participating in the USDA Mutual Self-Help housing program, whose sweat equity lowers the total of the Section 502 loan but increases the value of the house, this change is especially problematic."

"Finally, we are perplexed by new requirements that will make the loan review process less efficient for USDA. Namely, loan reviews must now go through two separate rounds of review by Rural Development State Directors before approval. In addition, the changes will limit the ability for non-profit organizations to package loans, which USDA cannot do on its own. These changes are not only burdensome but also create uncertainty for families navigating this process," the Senators concluded.

The 502 loan program assists low- and very-low-income applicants obtain decent, safe, and sanitary housing in eligible rural areas by providing payment assistance to increase an applicant's repayment ability. The amount of assistance is determined by the adjusted family income.

"Habitat for Humanity affiliates across Maine work closely with families who rely on the Section 502 Direct Loan program to access homeownership in rural communities. USDA's recent changes to the program handbook-particularly lower loan caps, reduced income eligibility limits, and stricter appraisal rules-will make it far more difficult for these families to finance modest homes in many communities," said Amy Nucci, Executive Director at Habitat for Humanity of Maine. "These shifts would slow Habitat's ability to build new homes and support rural homebuyers, reducing much needed housing supply. Restoring the previous rules would keep this vital program working for the families and communities that depend on it."

"Avesta urges reconsideration of the new cap on rural home loans," said Jennifer Hawkins, President & CEO of Avesta Housing, northern New England's largest affordable housing provider. "At this time of high prices, USDA should be using all of its tools to support homeownership, not make it more difficult for first-time buyers,"

Also joining King and Curtis on the letter are U.S Senators Mike Crapo (R-ID), Mazie Hirono (D-HI), James Risch (R-ID), Tim Kaine (D-VA), Lisa Blunt Rochester (D-DE), Susan Collins (R-ME), and Alex Padilla (D-CA).

The full text of the letter can be found here and below.

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Dear Secretary Rolllins:

We write today to express our concerns with the recent revisions to the U.S. Department of Agriculture (USDA) Rural Development Section 502 Direct Loan handbook. Homeownership is the cornerstone of the American Dream, but all too frequently, it is out of reach for rural Americans. While we applaud all efforts to properly steward taxpayer dollars, we believe these revisions make the program less efficient and may leave families in our states without a path to homeownership.

Since 1949, USDA has been helping rural Americans become homeowners. The Section 502 Direct Loan program administered by the Department has been instrumental in this success, financing homes for millions of families across the country. This program has also helped incentivize housing development in the rural communities that need it most. Unfortunately, the revisions issued to the handbook on February 10, 2026, PN655, severely curtail program eligibility and make it more difficult for non-profit partners to place rural families in homes.

One of the most concerning changes is the reduction of Section 502 loan limits from 80 to 60 percent of the U.S. Department of Housing and Urban Development Section 203(b) limit. This revision is coupled with another that prohibits loans from being issued when the appraised value of the house exceeds the loan limit. For families participating in the USDA Mutual Self-Help housing program, whose sweat equity lowers the total of the Section 502 loan but increases the value of the house, this change is especially problematic. Under the revised handbook, families who reduce risk to the federal government through their own labor may nonetheless be disqualified. Further, these changes present a fundamental misalignment with current home values, which are already soaring due to stubborn inflation, construction costs, and other supply-side challenges. We fear that reducing loan limits without exception will render the 502 Direct program inaccessible to countless rural households.

Finally, we are perplexed by new requirements that will make the loan review process less efficient for USDA. Namely, loan reviews must now go through two separate rounds of review by Rural Development State Directors before approval. In addition, the changes will limit the ability for non-profit organizations to package loans, which USDA cannot do on its own. These changes are not only burdensome but also create uncertainty for families navigating this process.

In closing, we respectfully request that USDA immediately rescind the February 10 revisions and restore prior guidance. We also ask that USDA work closely with Congress and the public to ensure that any future revisions to the handbook align with the statutory intent of the program and reflect the realities of rural housing markets. We are grateful for your attention to this matter, and we welcome the opportunity to discuss practical alternatives that preserve both program integrity and ensure the Section 502 Direct Loan program remains accessible to eligible rural families.

Sincerely,

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