USDA Rural Development

What Is USDA Rural Development?

USDA Rural Development (RD) is the part of the U.S. Department of Agriculture that finances housing, water and electric systems, broadband, and businesses in rural communities. Its housing programs are run by the Rural Housing Service (RHS), which USDA set up after Congress authorized a departmental reorganization in 1994.

RD’s housing programs are targeted to rural areas. Rural residents can also use other federal housing programs, most of which are run by the Department of Housing and Urban Development (HUD).

How Rural Development Works

RD’s housing programs are authorized by Title V of the Housing Act of 1949 and are known by their section numbers:

According to a 2022 Congressional Research Service overview, RD operates through a national office and state offices led by presidentially appointed state directors. State offices accept and process applications for direct loans and grants.

Most programs are limited to places that meet the law’s definition of rural. In general, that means open country and places that are not part of an urban area and have:

• up to 2,500 people;
• 2,500 to 10,000 people, if the place is rural in character; or
• 10,000 to 20,000 people, if the place is outside a metropolitan statistical area and has a serious lack of mortgage credit for lower- and moderate-income families.

Some places of up to 35,000 people that lost rural status after a census keep it until 2030 census data arrive, if they are rural in character and lack mortgage credit. USDA publishes an online map for checking specific addresses.

Recent Changes

The 21st Century ROAD to Housing Act (Public Law 119-101) became law on July 11, 2026. Its “Rural Housing Service Reform Act” section made permanent several tools, previously renewed in annual spending bills, for preserving Section 515 and Section 514 farm labor properties. A separate section says USDA does not have to study the environmental effects of USDA-assisted housing built on infill sites, meaning sites already served by infrastructure such as water lines, sewer lines, and roads.

Why It Matters for Workforce Housing

The Section 502 guarantee reaches moderate-income households, so it can help rural teachers, nurses, and tradespeople buy homes. Section 502 direct loans generally require no down payment. Farm labor housing serves agricultural workers directly. Unlike other RHS programs, it can be built outside rural areas to house nearby farm labor.

Criticisms and Limitations

Section 515 properties leave the program when their USDA mortgages mature or, in some cases, are paid off early. When that happens, the affordability restrictions end and the property can convert to market-rate housing. As of 2022, the Congressional Research Service reported that USDA had not made a Section 515 loan for new units since FY 2011, with loan funds going to preserve existing properties instead. Proposals to end some rural housing programs, or to move some or all of them to HUD, have surfaced over the years. Rural housing advocates have generally opposed them, citing USDA’s field offices and rural expertise.