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SFH Direct Loan and Grant Programs
July 16, 2026
Updated Income Limits for 2026 and Handbook-1-3550 Changes
Fiscal Year 2026 Income Limits
Rural Development (RD) published Fiscal Year 2026 income limits for the Single Family Direct Loan and Grant Programs on July 13, 2026 through Procedure Notice (PN) 657. RD updated income limits on the impacted websites and systems, and the following automated worksheets were also updated:
Handbook (HB)-1-3550
RD changed HB-1-3550 on July 13, 2026 with the posting of PN 657. Below are important policy changes, but please review the PN carefully for more details:
- RD no longer requires Phase 2, Property Submittal by loan application packagers. Packaged applications already accepted by Rural Development can receive the permissible packaging fee without submitting Phase 2.
- Clarification regarding the calculation of payment shock, even if an applicant is not currently paying rent.
- Repossession within the last 36 months is an indicator of unacceptable credit.
- Student loan payments must be included in total debt ratio, regardless of the payment status. The amount included must be the actual document payment amount (when above zero), or one-half percent of the outstanding loan balance.
- The standard minimum area loan amount needed to support the purchase of a decent, safe, and sanitary dwelling is 20% of the standard maximum area loan limit.
- To verify the circumstances surrounding credit blemishes, third party documentation is required when an applicant submits a written explanation.
- Dependent deduction is increased to $500, and deduction for elderly households is increased to $550.
- Amounts received under the Low-Income Home Energy Assistance Program (LIHEAP) are no longer counted as repayment income.
These changes reflect RD’s commitment to responsible lending practices and program integrity, ensuring that resources are used effectively to support rural homeownership for years to come. Thank you for supporting the Single Family Housing Direct Programs.
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