Plain-English definition

What is RD 515 (Section 515 Rural Rental Housing Loans) ?

RD 515, also called Section 515, is the USDA Rural Development program that lends money to build and preserve rental housing in rural areas. USDA lends at market rate, then uses interest credit to bring the effective rate down to 1%, in exchange for keeping rents affordable.

The program comes from Section 515 of the Housing Act of 1949 and is run by USDA Rural Development. The rules for it and for the other Rural Development multifamily programs sit in 7 CFR part 3560. Borrowers can be individuals, partnerships, nonprofits, or public bodies. The loan is amortized over 50 years, which is what makes the payment small enough for the rents to work.

Section 515 is the mortgage. Section 521 Rental Assistance is the rent subsidy that often sits on top of it, and it works much like Section 8: the household pays a share of adjusted income and Rural Development pays the difference up to the approved rent. A property can carry 515, 521, and LIHTC at the same time.

Rural Development adopted HOTMA on July 1, 2025, well ahead of HUD Multifamily. On a property that layers 515 with project-based Section 8, the Rural Development layer is already on HOTMA rules while the HUD layer stays on pre-HOTMA rules until January 1, 2027.

The program's real pressure is maturity. Loans written decades ago are reaching the end of their terms, and when a 515 loan matures the use restrictions tied to it end with it. That is why preservation, rather than new construction, is where most 515 activity now sits.

Example

A 24-unit rural property carries a 515 loan, 521 Rental Assistance on 18 units, and LIHTC on the whole building. That is three sets of income limits, three recertification rules, and since July 1, 2025, two different HOTMA statuses in the same file until HUD's Multifamily date arrives.

Why RD 515 matters

Rural Development properties are small and layered, which is the worst combination for compliance overhead. A 24-unit property can carry the same number of program rules as a 400-unit one, spread across a staff of two. Software built only for HUD or only for LIHTC leaves the 515 layer to a spreadsheet.

Related terms

Section 8Section 8 is the federal rental assistance program that pays part of a household's rent to a private owner.
LIHTCLIHTC, the Low-Income Housing Tax Credit, is a federal tax credit that pays developers to build and keep rental housing affordable.
HOTMAHOTMA, the Housing Opportunity Through Modernization Act of 2016, is a federal law that changes how HUD programs count income and assets.

How Fortress handles it

Sources

Last reviewed August 29, 2026. Back to the glossary