Thousands of rural homes could become unaffordable for tenants as Section 515 phases out

Finding affordable rural housing has been a long-term
problem for residents. (Photo via Insight News)

A federal housing program that has supported affordable housing since 1963 is being phased out, leaving "half a million rural homes at risk," writes Brian Y. An, a public policy expert at the Georgia Institute of Technology, for Insight News, which serves the greater Minneapolis area. As Section 515 mortgages get paid off, landowners no longer have to guarantee lower rental costs.

While many Americans may see affordable rents as a more urban problem, finding and affording rental housing in rural areas has also been a long-term challenge, which the USDA sought to mitigate with incentivized loan programs like Section 515.

By offering below-market interest rates, Section 515 attracted private and nonprofit developers to "build and manage residential housing for low-income residents in small towns and rural counties," An explains. "Since its inception, the program has supported the construction of over 533,000 apartments, townhouses and other small, multifamily rental homes."

In 2011, the USDA stopped issuing Section 515 loans, which means the majority of properties built with Section 515 financing will mature by 2045. Once a Section 515 property is paid off, its owners can set their own rents, sell the property or end current home leases. An adds, "Because of this flexibility, a large share of rural affordable housing units could soon be converted to properties rented at market rates."

Rentals owned by nonprofits are the least likely to convert low-rent to market-rate rent. An writes, "Nonprofit-owned buildings. . . are 30% to 40% less likely to convert formerly Section 515 affordable housing into market-rate properties after the owners pay off their loans."

Washington lawmakers are working to address the gradual end to rural housing support through Section 515 rentals. The bipartisan Rural Housing Service Reform Act serves as an example. An explains, "It 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."