A successful USDA program that has supported more than 533,000 affordable rental homes in rural America is getting phased out

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Brian Y. An, Georgia Institute of Technology

(THE CONVERSATION) The high cost of renting and buying homes in U.S. cities is no secret. But this affordability problem isn’t limited to urban regions – it affects rural areas as well.

Rural areas, home to about 25% of Americans, benefit from federally supported rental housing programs – particularly a U.S. Department of Agriculture program to provide affordable homes for low-income residents.

The USDA’s Section 515 program is the primary way that the U.S. government finances affordable rental homes in rural communities. Since its inception in 1963, the program has supported the construction of over 533,000 apartments, townhouses and other small, multifamily rental homes.

The program offers below-market-rate loans to private and nonprofit developers who build and manage residential housing for low-income residents in small towns and rural counties. The terms of the deal between property owners and the government obliges these landlords to keep rents affordable for their occupants for decades, generally restricting rent to about 30% of tenants’ income.

Last new loans were in 2011

People who live in Section 515 housing typically pay around US$325 per month. That’s much less than rural market-rate rents, which typically run $800-$1,100 per month for modest homes.

Because the USDA stopped issuing new Section 515 loans in 2011, this arrangement is phasing out now as existing loans mature.

Loans for about 90% of all remaining Section 515 homes will mature by 2045, according to the Housing Assistance Council, a national nonprofit that supports affordable housing efforts throughout rural America. By 2050, the owners of nearly all properties currently in the program’s portfolio are projected to have paid off their mortgages.

And once most of the owners of these homes exit the Section 515 program, it will have been fully phased out.

An often-overlooked housing program

As a public policy professor who studies housing, I wanted to understand what happens when Section 515 loans mature. I also was interested in what determines whether properties remain affordable or leave the program after the loans are paid off.

To find out, I worked with three other housing policy researchers on a national study that was peer-reviewed and published in Housing Policy Debate in September 2025.

As of 2024, these loans were still supporting some 400,000 homes on almost 13,000 properties across 87% of all U.S. counties.

The roughly 750,000 Americans in those homes are among the nation’s poorest. The average household income of someone living in Section 515 housing in 2023 was just about $16,000 per year, which was only about one-fifth of the national median household income, which hovered around $76,600 during the same period in inflation-adjusted 2023 dollars.

In addition to having a very low income, more than 60% of the people enrolled in the program are over 62, have disabilities, or fall into both of those categories.

Market-rate options after maturity

The vast majority of these affordable rental homes were built in the 1970s through the 1990s and financed with USDA loans that last between 30 and 50 years.

By 2050, there will be no Section 515 housing left.

The owners of these rental properties no longer have to keep rents affordable once they have paid off their loans. And their owners and tenants may also lose access to a USDA rental assistance program, which helps keep tenants’ housing costs low.

They can refinance the homes or sell the properties. They also can continue to charge affordable rents to occupants or convert those units to market rate. Because of this flexibility, a large share of rural affordable housing units could soon be converted to properties rented at market rates.

What the data shows so far

For this study, our research team analyzed data from nearly 15,000 of the Section 515 properties throughout the country, which have been placed in service since 1963 – including many that are no longer providing rural affordable housing.

We found that the largest factors determining whether a building remains affordable after a Section 515 loan matures are who owns and manages that property. Buildings owned by for-profit companies are far more likely to leave the program than those that belong to nonprofit housing organizations.

Nonprofit-owned buildings, after accounting for building age and local market conditions, are 30% to 40% less likely to convert formerly Section 515 affordable housing into market-rate properties after the owners pay off their loans.

After analyzing this data, we also concluded that buildings run by small property management companies are more likely to leave the program than those managed by larger ones. Properties where the owner manages the homes are also more likely to exit.

Landlords owning more residential properties were also more likely to exit the program. This indicates that larger landlords may be able to afford the renovations and upgrades required to turn their buildings into market-rate housing once restrictions end.

Why subsidies and local markets matter

Having subsidies through other government programs can help keep affordable housing units from being converted to market-rate housing.

One-third of Section 515 properties also get support from other programs, including Section 8 vouchers and low-income housing tax credits. Those tax credits are another federal incentive that’s provided to developers who build and rehabilitate affordable rental housing while allowing lower rents for low-income tenants.

Those properties are more likely to remain affordable, even years after some of these tax incentives expire.

Local economic conditions can play a role too. In areas with high unemployment rates, large military populations and low housing inventory, properties are also more likely to exit the program.

That means the same rural counties experiencing economic or demographic pressures are often the most likely to have a decline in affordable housing units when owners pay off their Section 515 loans.

Steps that can be taken

Congress and the USDA have taken some steps to slow the loss of affordable housing in rural areas.

For example, the USDA has funded preservation efforts such as the Multifamily Housing Preservation and Revitalization pilot program, which provides grants, loan restructuring and other financing tools to help repair aging Section 515 properties and extend their affordability.

These efforts have helped preserve some buildings and support ownership transfers from private sector landlords to nonprofit housing groups. But they spend only tens of millions of dollars per year and focus mainly on maintaining existing properties rather than building new housing.

Researchers estimate that about $5.6 billion in repairs would be needed to preserve the affordable housing currently tied to the Section 515 program.

Some lawmakers have proposed reforms aimed at doing more than chipping away at the loss of this kind of affordable housing. The bipartisan Rural Housing Service Reform Act, first introduced in 2023 and reintroduced in 2025, would modernize USDA rural housing programs and allow certain rental assistance contracts to continue after mortgages mature. As of early 2026, the bill remains under consideration.

Over the next two decades, most of these landlords will pay off their Section 515 loans. Unless the government reinvigorates the program or replaces it with something else, much of rural America’s affordable rental housing could gradually disappear as owners convert all Section 515 properties to market-rate housing.

Whether rural communities retain affordable housing will depend not only on what the federal government does, but also on the properties’ owners.

This article is republished from The Conversation under a Creative Commons license. Read the original article here: https://theconversation.com/a-successful-usda-program-that-has-supported-more-than-533-000-affordable-rental-homes-in-rural-america-is-getting-phased-out-273637.