Section 538 Rural Rental Housing Guaranteed Loans


This program has been designed to increase the supply of affordable multifamily housing in rural areas through partnerships between Rural Development and major lending sources, as well as State and local housing finance agencies and bond insurers. The program provides Federal credit enhancement to encourage private and public lenders to make new loans for affordable rental properties that meet program standards.

General information about this opportunity
Last Known Status
Program Number
Federal Agency/Office
Agency: Department of Agriculture
Office: Rural Housing Service
Type(s) of Assistance Offered
Program Accomplishments
Not Applicable.
Housing Act of 1949, as amended, Section 538, Public Law 106-569, 42 U.S.C. 1490p-2.
Who is eligible to apply/benefit from this assistance?
Applicant Eligibility
The applicant in this program is the lender. The lender must be approved and currently active with Fannie Mae, Freddie Mac, HUD/FHA insurance programs, Ginnie Mae or be a State or local Housing Finance Agency. A member of the Federal Home Loan Bank System or other lender may be able to participate if they can demonstrate satisfactory experience with multifamily lending.
Beneficiary Eligibility
Occupants must be families or persons with income not in excess of 115 percent of the Median Income at the time of initial occupancy.
Eligible borrowers include: individual partnerships; profit and not-for-profit corporations; limited liability companies; trusts; State and local agencies; and Indian Tribes. This program is excluded from coverage under 2 CFR 200, Subpart E - Cost Principles.
What is the process for applying and being award this assistance?
Pre-Application Procedure
This program is subject to environmental review pursuant to the National Environmental Policy Act (NEPA) of 1969. An environmental impact assessment is required for this program. This program is eligible for coverage under E.O. 12372, "Intergovernmental Review of Federal Programs." An applicant should consult the office or official designated as the single point of contact in his or her State for more information on the process the State requires to be followed in applying for assistance, if the State has selected the program for review.
Application Procedure
This program is excluded from coverage under 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. The lender originates the loan and performs the necessary underwriting and provides the documentation required by the RHS and request for guarantee to the RHS for consideration.
Award Procedure
Rural Development will review all the applications for compliance with the program requirements and issue the Conditional Commitment of Guarantee with conditions. Once the conditions are met the final Contract of Guarantee will be issued.
Contact the headquarters or regional office, as appropriate, for application deadlines.
Approval/Disapproval Decision Time
Decisions on applications will normally be rendered within 60-120 calendar days of receipt of a complete application.
Applicants may appeal adverse decisions in accordance with 7 CFR Part 11, National Appeals Division.
How are proposals selected?
Provided in the Notice of Funding Availability (NOFA).
How may assistance be used?
The guarantee will encourage the construction of new rural rental housing and appropriate related facilities. Housing as a general rule will consist of projects with five or more dwellings. The guarantee may not be made for nursing, special care or industrial type housing.
What are the requirements after being awarded this opportunity?
No reports are required.
In accordance with the provisions of 2 CFR 200, Subpart F - Audit Requirements, non-Federal entities that expend financial assistance of $750,000 or more in Federal awards will have a single or a program-specific audit conducted for that year. Non-Federal entities that expend less than $750,000 a year in Federal awards are exempt from Federal audit requirements for that year, except as noted in 2 CFR 200.503. As required by the lender and program regulations.
Good business records and any records required by the lender.
Other Assistance Considerations
Formula and Matching Requirements
This program has no statutory formula.
This program has no matching requirements.
MOE requirements are not applicable to this program.
Length and Time Phasing of Assistance
Not applicable. See the following for information on how assistance is awarded/released: The funding takes place as outlined in the Notice of Funding Availability.
Who do I contact about this opportunity?
Regional or Local Office
See Regional Agency Offices. Consult your local telephone directory under U.S. Department of Agriculture for Rural Development county or district office numbers or visit the website for a State Office listing.
Headquarters Office
Director, Multifamily Guaranteed Loan Division 1400 Independence Avenue SW, Washington, District of Columbia 20250 Phone: (202) 720-1604
Website Address
Financial Information
Account Identification
(Guaranteed/Insured Loans) FY 14 $136,162,031; FY 15 est $150,000,000; and FY 16 est $150,000,000
Range and Average of Financial Assistance
Not Applicable.
Regulations, Guidelines and Literature
The Final Rule, 7 CFR 3565, became effective January 19, 2005. Also available in the Guaranteed Rural Rental Housing Program Origination and Servicing Handbook.
Examples of Funded Projects
Not Applicable.


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