Section 538 vs Section 515: USDA's two rural rental programs

They finance the same kind of property for different tenants. Section 515 is a direct USDA loan for very low, low and moderate income tenants, often paired with USDA rental assistance. Section 538 is a USDA guarantee on a private lender’s loan, for tenants up to 115% of area median income, with no subsidy on the rate.

	Section 515	Section 538
Who lends	USDA Rural Development, directly	A USDA-approved private lender; USDA guarantees up to 90%
Regulation	7 CFR part 3560	7 CFR part 3565
Tenant income	Very low, low or moderate income (3560.152)	Up to 115% of AMI at move-in (3565.202)
Rent	Basic and note rents approved by USDA; rental assistance where available	Unit cap of 30% of 115% of AMI; project average 30% of 100% (3565.203)
Rate	USDA direct loan terms (7 CFR part 3560)	Negotiated, fixed, under USDA’s maximum; no interest credit
Use today	Mostly existing properties being preserved	New construction, rehab and 515 transfers

In USDA’s public files, the 515 side is the existing stock: over 12,000 active properties. The 538 side is newer, with 1,557 guaranteed loans in USDA’s October 2026 file. Browse the 538 loans and their lenders or the 515 properties by county.

Which one a developer uses

For a new rural project, 538 is the program you can actually apply to: a lender originates it, USDA guarantees it, and applications are accepted year-round. For an existing 515 property, the two meet. The buyer assumes or restructures the 515 debt and adds a 538-guaranteed loan for the purchase and rehab, as covered in using 538 to preserve a 515 property.

What tenants notice

Tenants in a 515 unit with rental assistance pay the highest of 30% of adjusted income, 10% of gross income or a welfare shelter amount (7 CFR 3560.203). Tenants in a 538 unit pay the rent, up to the cap, and qualify by income only when they move in. A 538 property can also carry housing tax credits, which set lower income and rent limits on the units they cover.