USDA Section 538 guaranteed rural rental housing
Is your site rural enough for a 538 loan?
Section 538 is a USDA guarantee against loss on up to 90% of a private lender's loan for rural rental housing, at up to 40 years and up to 90% or 97% of cost. The first test is the address. Check it against USDA's own map.
The terms that decide a 538 deal
| Term | Rule | Source |
|---|---|---|
| Guarantee | Up to 90% of the loan | 7 CFR 3565.52(c) |
| Loan size | Lesser of 90% of cost or value (for-profit); 97% (nonprofit or public) | 7 CFR 3565.204 |
| Term | 25 to 40 years, amortization up to 40, fixed rate | 7 CFR 3565.209, 3565.210 |
| Coverage | At least 1.15x DSCR; 1.11x for the first 200 pilot loans through September 2028 | 7 CFR 3565.303; 91 FR 60930 |
| Tenant income | At or under 115% of area median at move-in | 7 CFR 3565.202 |
| Rent | Each unit at or under 30% of 115% of AMI; project average at or under 30% of 100% | 7 CFR 3565.203 |
| Fees | 65 bp initial, 35 bp annual; 60 and 25 for workforce, 515 preservation and Opportunity Zone deals | 91 FR 61820 |
| Interest credit | None available | 89 FR 104031; Pub. L. 119-37 |
| Funding | $400 million program level for fiscal 2026; applications accepted year-round | Pub. L. 119-37; 89 FR 104031 |
Section 538 has no annual application round. USDA takes complete applications through approved lenders as they come and only ranks them when money runs short. When it does, a tax credit deal that waives its Qualified Contract rights earns 12 points; most other priorities are worth 1 point each (89 FR 104031).
The 8 most recent 538 closings in USDA's data
| Project | Closed | Loan | Units | Population | Lender |
|---|---|---|---|---|---|
| Chester Townhouses II Chester, SC | 2026 | $1,995,000 | 52 | 5,241 | BONNEVILLE MORTGAGE COMPANY, LLC |
| Pecan Bend Apartments Mansfield, TX | 2026 | $2,200,000 | 32 | 72,602 | BONNEVILLE MORTGAGE COMPANY, LLC |
| Garden Walk Of Tahlequah Tahlequah, OK | 2026 | $9,800,000 | 174 | 16,153 | BONNEVILLE MORTGAGE COMPANY, LLC |
| Emerald Park Apartments Whitesboro, TX | 2026 | $350,000 | 76 | 4,181 | BONNEVILLE MORTGAGE COMPANY, LLC |
| Emerald Park Apartments Whitesboro, TX | 2026 | $3,000,000 | 76 | 4,181 | BONNEVILLE MORTGAGE COMPANY, LLC |
| West Family Apartments West, TX | 2026 | $685,000 | 32 | 2,571 | BONNEVILLE MORTGAGE COMPANY, LLC |
| West Family Apartments West, TX | 2026 | $115,000 | 32 | 2,571 | BONNEVILLE MORTGAGE COMPANY, LLC |
| Gardenwalk Of West Columbia West Columbia, TX | 2026 | $1,250,000 | 56 | 3,649 | BONNEVILLE MORTGAGE COMPANY, LLC |
Common questions
What is a Section 538 loan?
A loan from a private lender that USDA Rural Development guarantees against loss on up to 90% of the loan, to build or rehab rental housing in an eligible rural area. Tenants must earn no more than 115% of area median income at move-in, and the term runs 25 to 40 years at a fixed rate.
How is 538 different from Section 515?
Section 515 is USDA's direct loan program, where USDA itself is the lender. Section 538 is a guarantee on a private lender's loan. USDA's December 2024 process notice lets a 538 loan finance the transfer and rehab of an existing 515 property.
Who runs Open Country?
Open Country is operated by Janover Capital LLC, a private company. It is not USDA or any government agency. The data on this site comes from USDA's public files, with the date of each.
Rural rental deal in hand?
Send it to the Janover Capital desk for 538 guaranteed loans, 515 transfers, construction and bridge debt.