Affordable housing in rural America faces uncertainty as a pivotal government program nears its end. While urban areas are often spotlighted for housing affordability issues, rural communities, home to about 25% of Americans, are quietly experiencing similar challenges. The U.S. Department of Agriculture’s Section 515 program has long been a pillar of affordable housing in these areas, but its future is now in question.
Since its start in 1963, the USDA’s Section 515 program has facilitated the creation of over 533,000 affordable rental units, enabling low-income residents to live in small towns and rural counties by offering developers below-market-rate loans. This initiative mandates that rents remain affordable, typically at 30% of tenants’ income. However, the last new loans were issued in 2011, signaling a gradual phase-out as existing loans mature.
Ongoing Challenges and Future Outlook
As of 2024, Section 515 still supports around 400,000 homes across nearly 13,000 properties in 87% of U.S. counties, serving some of the nation’s poorest. The average income of tenants in these homes was approximately $16,000 in 2023, significantly below the national median income of $76,600. However, as loans mature by 2050, the program will be fully phased out, leaving property owners free to convert these homes to market-rate rentals.
The absence of new loans has already started affecting the affordability landscape. Currently, residents pay about $325 monthly under Section 515, compared to typical rural rents of $800-$1,100. When these loans mature, property owners may no longer be bound to keep rents low, and the USDA rental assistance that helps tenants could also be lost.
Determining Factors for Affordability
A recent national study, published in Housing Policy Debate, investigated what happens when Section 515 loans mature. It found that nonprofit ownership significantly influences whether properties remain affordable, with nonprofits being 30% to 40% less likely to convert to market-rate housing compared to for-profit owners. Similarly, smaller property management companies and properties managed directly by owners are more likely to exit the program.
Subsidies from other programs, such as Section 8 vouchers and low-income housing tax credits, can help maintain affordability. Properties benefiting from these subsidies are more likely to stay affordable over the long term.
Potential Solutions and Legislative Efforts
Efforts are being made to slow the loss of affordable housing. The USDA’s Multifamily Housing Preservation and Revitalization pilot program aims to repair aging properties and extend their affordability, yet its funding is limited. An estimated $5.6 billion is needed to preserve existing Section 515 housing.
Legislation like the Rural Housing Service Reform Act seeks to modernize USDA programs and extend rental assistance after mortgages mature. This bill, reintroduced in 2025, remains under consideration as of early 2026.
The future of rural affordable housing hinges on governmental actions and property owners’ decisions. Without renewed support or new initiatives, the affordable housing landscape in rural America could face significant challenges as Section 515 properties shift to market-rate rentals.
