Rental Assistance (Sec. 521)

What this funds

The RA program remains a critical resource for very low-income rural households. This project- based program provides funds directly to project owners of Section 515 or 514/516-financed rental housing. On behalf of tenants with incomes too low to pay the unsubsidized rent from their own resources, RD pays the project owner the difference between the tenant's contribution (30 percent of adjusted income) and the monthly rental rate (based on the owner's project costs). Rental Assistance (RA) may be used for existing and newly constructed developments; however, the focus of RA is renewing existing contracts. Projects must be established on a nonprofit or limited profit basis. The RA program has a portfolio of approximately 12,600 properties, as of the end of July 2025, across the U.S. The RA that each property receives is based on what the property's estimated need is for the next 12 months. Continued rural inflationary pressures have outpaced the National inflation factor due to the lack of housing stock, increases in insurance costs and employment availability. For 2025, 77.57 percent of the properties in the portfolio had a rent increase with an average rent increase of $86.03 per unit per month. For 2024, 94.28 percent of the properties in the portfolio had a rent increase with an average rent increase of $71.92 per unit per month. In 2023, 89.6 percent of properties had a rent increase with an average rent increase of $54.30 per unit per month. This sums to a 3-year total increase of $212.25 per unit, per month or $2,547.00 per unit annually. Prior year portfolio tenant demographics include 92.13 percent (345,176 households) of very low- income tenants. Average incomes in the portfolio only increased an average of 7.4 percent in 2023 below the 8.4 percent year-over-year rental price growth as of May 2023, according to a Federal Reserve Bank of Dallas forecast that uses data from the federal government's consumer price index. In 2025, USDA obligated $1.642 billion for renewing 212,630 units. The agency is expecting to obligate the total funding provided in the 2026 appropriations which will support all the expected demand for renewals, which is estimated to be 280,000 units out of the 305,000 total. Beginning in 2024, Congress granted Rural Development the ability to decouple RA from Section 514/515 loans for maturing properties as the primary strategy to preserve affordable housing for tenants while supporting rehabilitation and preservation of the portfolio. In 2026, Congress provided decoupling authority for up to 5,000 units. The 2027 Budget continues to request decoupling, removing the unit limit, for USDA's project-based RA to continue after a MFH debt has been paid off, which is essential to facilitate preservation at scale across the Section 515 MFH portfolio. Decoupling RA is aligned with boosting the financial security of rural communities through access to affordable housing. Working towards this objective in 2026, the agency will continue stakeholder engagement, develop program parameters to ensure preservation of affordable housing in rural communities, and work to increase program participation. The requested $1.795 billion in Section 521 RA funding will support renewals for 248,358 units, which is the estimated expected demand for renewals in 2027. The increase can be attributed to year-over-year cost increases, resulting in a projected average unit cost of $7,085 compared to the $6,879 unit cost projected for 2026. This increase in funding is essential to address the growing need for safe, affordable housing in rural America and to ensure the program's sustainability. Rural inflationary pressure continues to drive higher costs for goods and services, partly due to a lack of housing stock, competition, and employment availability.

Extracted from Rural Housing Service, p. 30. Verbatim; nothing here is paraphrased.

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