Learn About Senior Federal Housing Programs

What housing programs are available for low-income senior citizens? This is a common question asked by elderly men and women across the country. Fortunately, the U.S. Department of Agriculture (USDA) and the Department of Housing and Urban Development (HUD) provide a variety of federally funded housing programs to help low-income senior citizens find and remain in affordable, safe homes.

Each loan, grant, voucher or repair program offers different low-income housing benefits for elderly renters or homeowners who meet the eligibility requirements of these federal senior housing programs. Certain programs assist seniors residing in rural areas, while others provide aid to those living in cities and suburban locations. For federal housing assistance purposes, a senior citizen is defined as an adult 62 years of age or older.

HUD and USDA programs use a standard income rating that is based on the median income for that location to determine eligibility. Typically, incomes in the low range must be no more than 80 percent of an area’s median income, while very low incomes cannot be more than 50 percent of an area’s median and extremely low incomes must fall below 30 percent of an area’s median range.

While most federal senior housing programs service these income ranges, certain USDA programs are available to seniors in the moderate-income range as well, which is no more than 115 percent of the area’s median. Review the sections below to learn more about these federal low-income housing benefits for the elderly.

What is the HUD Housing Choice Voucher program (Section 8)?

Extremely low- to low-income families, including the elderly and disabled, can apply for federal assistance from HUD’s largest assisted housing program. Commonly referred to as “Section 8,” the HUD Housing Choice Voucher program provides rental vouchers that enable seniors to obtain safe and sanitary rental housing by subsidizing a percentage of their monthly rent.

By receiving these HUD vouchers, participants can rent privately owned units that they would not be able to afford if they had to pay the full rent amount themselves. Participants must pay their landlord a percentage of their income toward rent each month, while HUD pays the remainder directly to the property owner.

Seniors approved for the program have the flexibility to find the home or apartment they wish to rent, as long as it meets certain HUD criteria. Senior-led households may deduct a certain amount of qualified expenses off the top of their reported income to better qualify. Additionally, in certain areas with limited subsidized units, seniors are given priority when housing units become available. Seniors can also benefit from choosing one of many HUD housing authorities that provide senior renters with referrals to social services and transportation assistance when needed.

What are Section 504 Rural Housing Repair and Rehabilitation Loans?

Low-income elderly owner-occupants of modest single-family homes in rural locations may apply for a USDA Section 504 loan to fund home repairs. These USDA loans can help seniors fund projects that modernize and improve their homes, remove health and safety hazards or make the home more sanitary.

USDA Section 504 loan and grant programs can also be used to make a home accessible for disabled household members. Applicants for this program must have very low income, use the loan for the purposes described above and be unable to obtain a loan from another source. Loans can only be extended to rural homeowners who have the means and ability to repay the funds.

The USDA allocates Section 504 loans according to a percentage of the national number of rural occupied units and the national number of rural households with very low income. Section 504 loans are issued at a one percent interest rate and have a repayment period of up to 20 years.

If loan recipients find themselves unable to repay the full amount of the loan, they may apply for a Section 504 grant to cover the remaining balance. The outstanding loan balance cannot exceed $20,000, but 504 loans and grants can be combined for one applicant to receive up to $27,500 in assistance, if necessary.

What are Section 504 Rural Housing Repair and Rehabilitation Grants?

Section 504 Rural Housing Repair and Rehabilitation Grants can be used for the same home improvement issues addressed with 504 loans, but these do not have to be repaid. Senior citizens eligible for the program must be very low-income homeowners who are at least 62 years old, reside in a rural area and lack the means or ability to repay a Section 504 loan.

Contact your local USDA office if you wish to submit a grant application. USDA staff will determine your eligibility for federal senior housing programs and verify your need for this type of home improvement assistance.

Find Out About the Section 502 Rural Housing Loan (Direct)

A USDA Section 502 direct loan helps low- and very low-income senior citizens purchase or renovate homes in rural areas. The program provides up to 100 percent financing, and senior citizens may use the funds to build, repair or relocate a home. Section 502 loans can also be used to purchase a homesite and prepare it with water and sewage systems.

Under certain limited circumstances, a recipient may use funds from a Section 502 direct loan to refinance their existing home. The USDA determines the amount of the subsidy and the interest rate based on the family’s income and where it falls as a percentage of the area’s median income. This method generally results in the borrower paying 22 to 26 percent of their income toward principal, interest, taxes and insurance, but the amount must not exceed the promissory note rate.

Section 502 direct loans have repayment terms of up to 33 years in most cases, but borrowers with an income falling below 60 percent of the area’s median income can obtain terms up to 38 years, if needed. For seniors to demonstrate that they meet qualifications for low-income senior housing, they must show an acceptable credit history, their ability to repay a loan and their inability to obtain financing through another institution.

Learn About the Section 502 Direct Housing Natural Disaster Loan

Section 502 Direct Natural Disaster Loans are designed to help low- or very low-income homeowners in areas identified by a presidential natural disaster declaration. Funds must be used to repair homes in rural areas that have been damaged by a natural disaster and applications are only accepted when the Federal Emergency Management Agency (FEMA) does not provide housing repair assistance.

Recipients may use funds from these loans to rehabilitate, buy, build or improve homes in rural areas, and the terms state that borrowers must provide proof they were unable to obtain credit from another source.

Your nearest USDA Rural Development field office processes applications and is the entity in charge of making local funding decisions. Applicants may also receive a payment subsidy in the form of payment assistance or an interest credit. These types of subsidies can lower the borrower’s scheduled payment to a manageable amount.

Get Information About the Section 502 Guaranteed Rural Housing Loan

Low- or moderate-income senior citizens who cannot secure a conventional mortgage without providing some type of loan guarantee may apply for this USDA-funded rural housing loan program. Qualifying homeowners can use the loan funds to purchase new or existing homes in rural areas or to install water and sewage utilities on homesites.

Applicants do not have to provide a down payment to obtain a 502 Guaranteed Rural Housing Loan. Qualifying seniors are guaranteed a 30-year fixed-rate loan at current market interest rates and may borrow up to 100 percent of the home’s appraised value or its acquisition costs.

Applicants who meet qualifications for low-income senior housing must have an acceptable credit history, the ability to repay the loan and proof of steady and dependable income. Elderly heads of household can claim deductions on certain qualified expenses from their annual income requirement.

First-time homebuyers, veterans and their spouses and the children of deceased veterans receive preference for Section 502 Guaranteed Rural Housing Loans. State and local offices of the USDA’s Rural Housing Service process and approve applications.