April 3, 2026 – The administration’s budget request for fiscal year 2027 was released on April 3. The proposals for USDA’s rural housing programs are slightly better than those in the FY26 budget.

Join HAC on April 8 at 2:00 pm Eastern time to learn more about the budget. In this webinar, HAC policy staff will cover what the budget includes for rural housing programs at USDA, HUD, and the CDFI Fund, and what the rest of the funding process will look like. Register here.

— Information about FY27 funding for the Department of Housing and Urban Development is available here. —

Homeownership

Last year USDA proposed to defund the Section 502 direct program but this year it suggests a $983 million program level. USDA estimates this amount will finance 5,355 homes.

The budget would eliminate the $5 million relending program that enables Native Community Development Financial Institutions to provide mortgages for Native American homebuyers.

The budget would change the current mortgage requirement for homeowners obtaining Section 504 repair loans. It would allow loans of up to $15,000 – rather than the current $7,500 – to be secured by a promissory note rather than a mortgage.

The administration would continue to support local organizations administering self-help programs under Section 523, despite its recent defunding of technical assistance providers to help them.

Rental Housing

The budget includes support for some of the elements of USDA’s rental preservation work, proposing to hold the Section 515 and Multifamily Preservation and Revitalization (MPR) programs at their FY26 levels. It would not, however, provide returns on investment or asset management fees for nonprofit and public agency owners. And it would not fund technical assistance to help nonprofits and public agencies purchase properties in need of preservation; USDA explains that it expects carryover funding from prior years to be sufficient to satisfy the demand.

The budget again supports decoupling Section 521 Rental Assistance from Section 515 and Section 514 mortgages, allowing tenants in rental properties where USDA mortgages are ending to continue to receive Rental Assistance. There would be no limit on the number of these Stand-Alone Rental Assistance (SARA) units.

Relying on SARA to cover tenants, the budget would eliminate funding for Section 542 vouchers. As it did last year, it makes no provisions for renters currently relying on these vouchers, explaining without details that “between the set of current recipients whose income would not allow them to re-qualify, the value of the voucher diminishing over time, and natural attrition from the program, very few of the current recipients will be affected. For the remaining few, options would include vacancies at other USDA properties with rental assistance, applying for HUD funded housing assistance or other similar programs at the state and local level.”

Other Information

USDA’s document explaining its Rural Development budget to Congress provides some additional information:

• the department’s request includes funding for a contract with a consultant to help implement the Build America, Buy America Act;
• a breakdown of staffing by state shows that Rural Development had the equivalent of 4,409 full-time staff in FY24 and 4,452 in FY25, and is expected to have 3,057 in both FY26 and FY27. It does not indicate whether the figures are calculated at the beginning of the fiscal year or at the end.

The Rural Housing Service budget explanation includes information about how the housing programs’ funds were used in FY24 and FY25.

Next Steps

This budget represents the first step in a lengthier process to set appropriations for FY27. Both the House and the Senate will develop their own appropriations bills, which may or may not resemble the President’s proposal. The House and Senate should resolve any differences between their bills and send final versions to the President for signature by September 30. If they do not meet that deadline, a continuing resolution would be needed to keep the government running.

For ongoing news on appropriations and other topics related to rural housing, subscribe to HAC emails, which include the free biweekly HAC News.

Table: USDA Rural Housing Service Funding Levels

Program ($ in millions)	FY26 Final	FY27 Budget	FY27 House*	FY27 Senate*	FY27 Final*
502 SF Direct Loans	$1,000	$983.2
Nat. Amer. SF Demo	5	0
502 SF Guar. Loans	25,000	20,000
504 VLI Repair Loans	25	25
504 VLI Repair Grants	21	20
515 MF Direct Loans	50	50
514 Farm Labor Hsg. Loans	15	15
516 Farm Labor Hsg. Grants	6	6
521 Rental Asst.	1,715	1,795
523 Self-Help TA	25	25
533 Hsg. Prsrv. Grants	6	6
538 MF Guar. Loans	400	500
542 Vouchers	48	0
Rental Prsrv. Demo (MPR)	30	30
Rental Prsrv. TA	2	0
Rural Cmty. Dev’t Init.	5	0
Cmty. Facil. Direct Loans	1,250	1,250
Cmty. Facil. Grants**	13	0
Tribal Colleges CF Grants	8	0
Cmty. Facil. Guar.	650	650

*These columns will be filled in as the appropriations process moves forward.

 

Abbreviations key

• NA: Not Available
• MF: Multifamily (Rental)
• SF: Single-Family (Homeownership)
• TA: Technical Assistance
• VLI: Very Low-Income