The Biden administration’s first full budget request, covering the fiscal year that begins on October 1, 2021, would maintain this year’s spending levels on rural housing programs and make available more loans for rural homebuyers. The Section 502 direct loan program, though which USDA makes loans directly to first-time purchasers, would be raised from $1 billion to $1.5 billion. The Section 502 guarantee program, which guarantees mortgages made by banks, would increase from $24 billion to $30 billion.

Fiscal year 2022 funding for most rural housing programs would remain at the same levels as in fiscal year 2021, with modest increases for self-help housing, rental assistance, and rental vouchers. The budget also indicates that the American Jobs Plan – the administration’s infrastructure proposal – would provide an additional $2 billion in rural housing spending. It does not give any details about how that money would be used.

The budget proposes to eliminate some protections for Section 521 Rental Assistance (RA). It would delete a requirement that recaptured RA be reused for rehab, preservation, or RA, and it would eliminate longstanding provisions requiring a 12-month delay before recapturing unused RA from Section 514/516 farmworker housing and mandating that farmworker housing RA be reused in other farmworker housing if possible. Language that allows recaptured RA to be used for “current needs” would be left in place.

Also deleted would be a provision from FY20 and FY21 appropriations that allows owners to request RA renewals for 20-year periods, subject to annual appropriations, which fund RA contracts for one year at a time.

The Multifamily Preservation and Revitalization (MPR) program, the Section 542 voucher program, and both farmworker housing programs would be shifted to new places in the budgetary scheme, an administrative move that would not alter the functioning of any of these programs.

The administration’s budget is the first step in the annual appropriations process. Each house of Congress will now craft its own proposal and differences will be worked out in the months to come.

USDA Rural Dev. Prog. (dollars in millions)	FY20 Final Approp.	FY21 Final Approp.	Amer. Rescue Plan Act	FY 22 Admin. Budget
502 Single Fam. Direct	$1,000	$1,000	$656.6a	$1,500
502 Single Family Guar.	24,000	24,000	–	30,000
504 VLI Repair Loans	28	28	18.3a	28
504 VLI Repair Grants	30	30	–	30
515 Rental Hsg. Direct Lns.	40	40	–	40
514 Farm Labor Hsg. Lns.	28	28	–	28
516 Farm Labor Hsg. Grts.	10	10	–	10
521 Rental Assistance	1,375	1,410	100	1,450
523 Self-Help TA	31	31	–	32
533 Hsg. Prsrv. Grants	15	15	–	15
538 Rental Hsg. Guar.	230	230	–	230
Rental Prsrv. Demo. (MPR)	28	28	–	32
542 Rural Hsg. Vouchers	32	40	–	45
Rental Prsrv. TA	1	2	–	0
Rural Cmnty. Dev’t Init.	4	6	–	6

^a The American Rescue Plan Act of 2021 provides $39 million in budget authority to refinance Section 502 direct loans and Section 504 loans for homeowners impacted by the coronavirus pandemic. USDA expects this funding to generate $656.6 million in Section 502 direct loans and $18.3 million in Section 504 loans.