USDA Section 521 Rental Assistance

How It Works

Section 521 Rental Assistance (often shortened to “RA”) is a rent subsidy run by the Rural Housing Service within USDA Rural Development. It is not a portable voucher. It is attached to units in properties financed by USDA’s Section 515 rural rental housing loans or its Section 514 off-farm labor housing loans.

Each property has a USDA-approved budget that sets a basic rent for every unit. Basic rent covers operating costs and the property’s subsidized mortgage payment. Under the statute, a tenant in an assisted unit pays the highest of:

• 30% of monthly adjusted income
• 10% of monthly gross income
• the part of any welfare payment designated for housing

USDA pays the owner the difference between that tenant contribution and the basic rent. Without rental assistance, a Section 515 tenant must pay at least the basic rent, which can mean paying far more than 30% of income. That difference is why RA matters for very low-income households.

The statute also limits how fast a tenant’s payment can rise. Increases caused by changes in law or regulation are capped at 10% in any 12-month period, unless they stem from the tenant’s own income gains.

Who It Serves

Very low- and low-income tenants living in a participating property are eligible for rental assistance. Moderate-income tenants are not. When a property has fewer assisted units than eligible households, owners must give priority to very low-income tenants (at or below 50% of area median income). In projects committed after FY1983, new contracts go to very low-income households, and no more than 5% of assisted units may go to other low-income households.

NLIHC’s 2025 Advocates’ Guide counts about 283,700 households receiving Section 521 assistance.

How to Access It

Renters do not apply to USDA. They apply to a Section 515 or Section 514 property and ask whether it has rental assistance. When an assisted household leaves, the owner may take up to six months to offer that assistance to another eligible household in the same property. After that, USDA can move unused assistance to other USDA-financed properties. Properties keep their own waiting lists.

Owners request rental assistance from USDA. Funding goes first to renewing existing contracts. Any money left can add assisted units in existing properties or start contracts in newly financed ones.

History

Section 521 was added to the Housing Act of 1949 in 1968 to provide interest subsidies on USDA loans. The Housing and Community Development Act of 1974 added the rental assistance authority in Section 521(a)(2). NLIHC dates the program’s start to 1978.

Funding has grown in recent years. Appropriations were about $1.49 billion in FY2023, $1.61 billion in FY2024, and $1.715 billion in FY2026.

Limitations

The core weakness is that Section 521 has depended on an active USDA mortgage. Historically, when a Section 515 or 514 loan matured, the property’s use restrictions ended and so did its rental assistance. USDA’s separate Section 542 vouchers have historically been available only when an owner prepays or a loan is foreclosed, not when it matures. That gap matters more each year, because NLIHC notes that mortgage maturities will speed up starting in 2028.

Congress began addressing this through annual appropriations. Starting in FY2024, a demonstration let USDA “decouple” rental assistance from expiring mortgages, and the FY2026 law allows up to 5,000 decoupled units. The 21st Century ROAD to Housing Act (Public Law 119-101), enacted July 11, 2026, makes decoupling permanent where:

• the loan is within four years of maturity,
• USDA finds that restructuring the loan is not financially feasible, or the owner does not agree to the proposed restructuring, and
• the property already has rental assistance.

USDA may then renew the contract for 20 years, subject to annual appropriations, and extend it to unassisted units in the property. The law also requires yearly notices to affected owners and tenants. USDA must publish an advance notice of proposed rulemaking within 180 days of enactment (early January 2027) and an interim final rule within one year (by July 11, 2027). Like all rental assistance, the program still depends on Congress funding it every year.