Administration Proposes Small Increases in Many Rural Housing Programs

The Biden Administration’s budget for fiscal year 2025, released on March 11, 2024, would hold funding at FY23 levels for most of USDA’s rural housing programs. In effect, it would restore the cuts made in the final FY24 appropriations bill, which was passed after the budget was prepared. Details are provided in the table below.

The recording and slides from HAC’s March 13 webinar on Rural Housing in the Fiscal Year 2025 White House Budget, are posted here.

— HAC’s analysis of FY24 appropriations for HUD programs is available here. —

Homeownership Housing

Like last year’s budget proposal, this year’s would eliminate subsidy “recapture” for the Section 502 direct program. Recapture requires that, when a low- or very low-income homeowner with a Section 502 direct loan sells the house or moves, they must repay the subsidy amounts they have received over the life of the loan. The administration estimates that eliminating this penalty for current borrowers would cost USDA $1.12 billion. It also proposes that Section 502 direct loans made in 2025 will not to be subject to recapture.

The budget would require that funding for housing construction or rehabilitation be targeted to projects that improve energy or water efficiency, implement green features, including clean energy generation or building electrification, electric car charging station installations, or address climate resilience of properties.

The budget also proposes three changes that were just adopted in the final FY24 funding bill, which had not been passed yet when the budget was prepared. These include extending the length of self-help and site-development loans from two years to five, and standardizing foreclosure procedures consistent with HUD’s.

Rental Housing

The administration again asks for legislative language to “decouple” Section 521 Rental Assistance from Section 515 and 514 mortgages, so that when a USDA rental housing mortgage ends for any reason, the tenants can continue to receive Rental Assistance. The final FY24 bill authorized a limited pilot to decouple up to 1,000 units of RA, but the budget does not propose any limits.

The budget requests Section 542 voucher funding be used only to renew “legacy vouchers,” $11.79 million in unobligated voucher funds be rescinded, and $20 million be added to provide HUD tenant protection vouchers for tenants “in USDA properties that are unable to refinance, participate in the multi-family preservation and rehabilitation options, or decouple.”


($ in millions)
FY23 Final FY24 Final FY25 Budget FY25 House* FY25 Senate* FY25 Final*
502 SF Direct Loans $1,250 $880 $1,250
     Nat. Amer. SF Demo 7.5 5 7.5
502 SF Guar. Loans 30,000 25,000 30,000
504 VLI Repair Loans 28 25 28
504 VLI Repair Grants 32 25 30
515 MF Direct Loans 70 60 70
514 Farm Labor Hsg. Loans 20 15 25
516 Farm Labor Hsg. Grants 10 7.5 10
521 Rental Asst. 1,488 1,608 1,690
523 Self-Help TA 32 25 32
533 Hsg. Prsrv. Grants 16 10 16
538 MF Guar. Loans 400 400 400
542 Vouchers 48 48 38**
Rental Prsrv. Demo (MPR) 36 34 90
Rental Prsrv. TA 2 1 0
Rural Cmty. Dev’t Init. 6 5 6
Cmty. Facil. Direct Loans 2,800 2,800 1,250
Cmty. Facil. Grants 25 5 22
Tribal Colleges CF Grants 10 8 10
Energy Cmties. Grants 10
Cmty. Facil. Guar. 650 650 650

Abbreviations key

  • MF: Multfamily (Rental)
  • SF: Single-Family (Homeownership)
  • TA: Technical Assistance
  • VLI: Very Low-Income

* These columns will be filled in as the FY25 funding process progresses.

** This $38 million is to renew vouchers already issued. Most tenants in USDA-financed rental properties where mortgages end or are paid off would receive Section 521 Rental Assistance under the Administration’s decoupling proposal. An additional $20 million is included in the HUD tenant protection vouchers account to provide new vouchers for tenants “in USDA properties that are unable to refinance, participate in the multi-family preservation and rehabilitation options, or decouple.”