USDA Rural Development – Section 502 Direct Loan Program Fiscal Year 2026 Factsheet: Record Processing Speed, Improved Credit Quality, and Full Multi-Year Deployment

(Washington, D.C., October 6, 2026) - The U.S. Department of Agriculture Rural Development has released its fiscal year (FY) 2026 fact sheet for the Single Family Housing Direct Home Loans program, also known as the Section 502 Direct Loan Program. In FY 2026, the program provided $571 million in affordable home loans, helping more than 2,100 very low- and low-income rural residents become homeowners. These investments reflect USDA's continued commitment to using taxpayer dollars responsibly and improving program efficiency while expanding access to safe, affordable housing in rural communities.

Statutory Multi-Year Allocation and Operational Execution

Under Congress's two-year funding structure for FY 2026-FY 2027, the Section 502 Direct Loan Program received a total of $1 billion. Of that amount, $750 million was made available for FY 2026 and $250 million was statutorily structured to carry over into FY 2027.

Even with the unexpected federal government shutdown that paused operations for several weeks, USDA Rural Development delivered strong results. In FY 2026, the agency provided $571 million in loans, about 76% of available funds, to help 2,115 families buy homes. The average loan amount was $269,000. These funds were obligated over only nine months, averaging $63 million per month. At that pace, a full 12 months of operations would have reached $762 million, slightly above the total funding available for FY 2026.

The full $250 million carryover amount remains untouched and will be used in FY 2027 to continue supporting homeownership in rural communities.

USDA Rural Development also redirected $7 million from underperforming Mutual Self-Help oversight contracts to direct grant awards. This shift gave Section 523 grantee organizations the resources they needed to help build 155 homes through the Section 502 Direct Loan Program.

Strengthened Credit Performance and Operational Efficiency

Rather than expanding high risk federal debt, USDA Rural Development prioritized strong fiscal discipline, lowering systemic taxpayer risk while expanding access:

1. 25% Reduction in First-Year Delinquency Rates: USDA improved financial literary support for applicants and strengthened credit screening. As a result, first-year delinquency rates dropped 25%, falling from 3.82% in September 2025 to 2.89% in September 2026, protecting both borrowers and taxpayers.
2. First Decrease in Average Loan Size in 14 Years: The average Section 502 Direct Loan amount decreased to under $270,000, the first year-over-year decrease in 14 years. Lower average loan sizes will allow the agency to serve more rural families by stretching federal funding further to benefit more rural families.
3. Faster Decision Times: Program improvements shortened the median eligibility determination time from 84 days to 64 days, getting families answers 20 days faster.

USDA Rural Development administers this funding through the Single Family Housing Direct Home Loans program, which provides affordable home purchase and repair financing to qualified individuals and families in rural areas.

For more information on USDA Rural Development investments in rural America, visit the Rural Data Gateway . The Rural Data Gateway is an online tool that strengthens USDA Rural Development partnerships with rural people, entrepreneurs, government officials and Congress by making Rural Development's investment data accessible to the public. For more information about USDA Rural Development programs, visit http://www.rd.usda.gov .

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