7 CFR §3555.101 — Loan purposes (USDA Guaranteed Rural Housing)

usda-7cfr-3555-101

7 CFR §3555.101 sets the closed list of eligible loan purposes and eligible costs for the USDA Section 502 Guaranteed Rural Housing Program: principal-residence use requirement, eligible-purposes list, eligible-costs list (including allowable closing costs with finder's-fee prohibition), combination construction-and-permanent loans, and the three refinance options (streamlined, non- streamlined, streamlined-assist) with their respective rate- reduction, appraisal, current-payment-history, and same-property requirements.

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source:
  type: regulation
  id: usda-7cfr-3555.101
  authority: 7 CFR §3555.101 — Loan purposes (USDA Guaranteed Rural Housing)
  description: |
    7 CFR §3555.101 sets the closed list of eligible loan purposes and
    eligible costs for the USDA Section 502 Guaranteed Rural Housing
    Program: principal-residence use requirement, eligible-purposes
    list, eligible-costs list (including allowable closing costs with
    finder's-fee prohibition), combination construction-and-permanent
    loans, and the three refinance options (streamlined, non-
    streamlined, streamlined-assist) with their respective rate-
    reduction, appraisal, current-payment-history, and same-property
    requirements.
obligations:
  - id: usda-7cfr-3555.101-principal-residence-use
    canonical_id: usda-7cfr-3555.101-principal-residence-use
    section: 7 CFR §3555.101 — Loan funds must be used for a principal-residence dwelling
    description: |
      Loan funds must be used to acquire a new or existing dwelling to be
      used by the applicant as a principal residence.
    type: do
    audit_question: For every USDA Section 502 Guaranteed loan [LENDER] originates, can [LENDER] evidence that loan funds were used to acquire a new or existing dwelling that the applicant will use as a principal residence?
    program_review: Do the P&Ps ensure Section 502 Guaranteed loan funds are used only to acquire a new or existing dwelling the applicant will use as a principal residence?
    file_review: Pull a sample; confirm loan funds went to acquire a dwelling the applicant will occupy as a principal residence.
    judgment: false
    feeds: []
    workflow_phase: origination
    owner_role: underwriter
    secondary_owner_role: compliance_officer
    cadence: per-application
    consequence: ''
    tags:
      - round-c
      - regulator-direct
      - usda
      - rhs-guaranteed
      - principal-residence
      - origination
      - promoted
    primary_source:
      tier: 1
      authority: 7 CFR §3555.101
      source_class: usda-regulation
      source_url: https://www.law.cornell.edu/cfr/text/7/3555.101
      snapshot_id: 26c27fd6e5118ed7
      fetched_at: '2026-05-24T19:34:38Z'
      content_hash: sha256:1f9e807ef8e9a4354b5a7631729e0d4002fcba07953bcf63ec4029391748b3ba
      paragraph_quote: Loan funds must be used to acquire a new or existing dwelling to be used by the applicant as a principal residence .
      drafter_attestation: |
        Copied verbatim from snapshot 26c27fd6e5118ed7 (content.txt) at
        2026-05-24T20:10Z. Substring is the full §3555.101 lead-in
        operative requirement.
    promoted_at: '2026-05-24T20:12:25+00:00'
    promoted_from: usda-7cfr-3555.101-roundc-v1.yaml
  - id: usda-7cfr-3555.101-b6vii-finder-fee-prohibition
    canonical_id: usda-7cfr-3555.101-b6vii-finder-fee-prohibition
    section: 7 CFR §3555.101(b)(6)(vii) — Finder's/placement fee prohibition
    description: |
      For USDA Section 502 Guaranteed loans, payment of finder's fees or
      placement fees for the referral of an applicant to [LENDER] is
      prohibited.
    type: dont
    audit_question: For every USDA Section 502 Guaranteed loan [LENDER] closes, can [LENDER] evidence that no finder's fee or placement fee for the referral of an applicant to [LENDER] was paid (whether by the applicant, [LENDER], or any third party)?
    program_review: Does the program prohibit any finder's fee or placement fee for the referral of an applicant to [LENDER] — controlling for payment by the applicant, [LENDER], or any third party?
    file_review: Review the closing-cost/fee population; confirm no finder's or placement fee for applicant referral was paid by any party.
    judgment: false
    feeds: []
    workflow_phase: origination
    owner_role: loan_officer
    secondary_owner_role: compliance_officer
    cadence: per-application
    consequence: ''
    tags:
      - round-c
      - regulator-direct
      - usda
      - rhs-guaranteed
      - finder-fee-prohibition
      - origination
      - promoted
    primary_source:
      tier: 1
      authority: 7 CFR §3555.101(b)(6)(vii)
      source_class: usda-regulation
      source_url: https://www.law.cornell.edu/cfr/text/7/3555.101
      snapshot_id: 26c27fd6e5118ed7
      fetched_at: '2026-05-24T19:34:38Z'
      content_hash: sha256:1f9e807ef8e9a4354b5a7631729e0d4002fcba07953bcf63ec4029391748b3ba
      paragraph_quote: Payment of finder's fees or placement fees for the referral of an applicant to the lender is prohibited.
      drafter_attestation: |
        Copied verbatim from snapshot 26c27fd6e5118ed7 (content.txt) at
        2026-05-24T20:10Z. Substring is the full §3555.101(b)(6)(vii)
        operative prohibition (trailing sentence of the allowable-
        closing-costs paragraph).
    promoted_at: '2026-05-24T20:12:25+00:00'
    promoted_from: usda-7cfr-3555.101-roundc-v1.yaml
  - id: usda-7cfr-3555.101-d3ii-refi-rate-not-exceeding-original
    canonical_id: usda-7cfr-3555.101-d3ii-refi-rate-not-exceeding-original
    section: '7 CFR §3555.101(d)(3)(ii) — Refinance: fixed rate not exceeding the original loan rate'
    description: |
      For Section 502 Direct or Guaranteed loan refinances under
      §3555.101(d)(3), the interest rate of the new loan must be fixed
      and must not exceed the interest rate of the original loan being
      refinanced.
    type: do
    audit_question: For every USDA Section 502 refinance loan [LENDER] closes under §3555.101(d)(3), can [LENDER] evidence that the new loan rate is (a) fixed and (b) not greater than the interest rate of the original loan being refinanced?
    program_review: Does the program account for the §3555.101(d)(3) refinance rate test — the new loan must be fixed-rate and its rate must not exceed the original loan's rate?
    file_review: Spot-check Section 502 refinances; confirm the new rate is fixed and not greater than the refinanced loan's rate.
    judgment: false
    feeds: []
    workflow_phase: origination
    owner_role: underwriter
    secondary_owner_role: compliance_officer
    cadence: per-refinance-closing
    consequence: ''
    tags:
      - round-c
      - regulator-direct
      - usda
      - rhs-guaranteed
      - refinance
      - rate-cap
      - origination
      - promoted
    primary_source:
      tier: 1
      authority: 7 CFR §3555.101(d)(3)(ii)
      source_class: usda-regulation
      source_url: https://www.law.cornell.edu/cfr/text/7/3555.101
      snapshot_id: 26c27fd6e5118ed7
      fetched_at: '2026-05-24T19:34:38Z'
      content_hash: sha256:1f9e807ef8e9a4354b5a7631729e0d4002fcba07953bcf63ec4029391748b3ba
      paragraph_quote: (ii) The interest rate of the new loan must be fixed and must not exceed the interest rate of the original loan being refinanced.
      drafter_attestation: |
        Copied verbatim from snapshot 26c27fd6e5118ed7 (content.txt) at
        2026-05-24T20:10Z. Substring is the full §3555.101(d)(3)(ii)
        operative paragraph.
    promoted_at: '2026-05-24T20:12:25+00:00'
    promoted_from: usda-7cfr-3555.101-roundc-v1.yaml
  - id: usda-7cfr-3555.101-d3iii-refi-180-day-payment-history
    canonical_id: usda-7cfr-3555.101-d3iii-refi-180-day-payment-history
    section: '7 CFR §3555.101(d)(3)(iii) — Refinance: 180-day current payment history required'
    description: |
      Existing borrowers seeking to refinance must have demonstrated their
      ability to meet payment demands by maintaining a current account
      for the 180 days prior to application.
    type: do
    audit_question: For every USDA Section 502 refinance loan [LENDER] originates under §3555.101(d)(3), can [LENDER] evidence that the borrower's loan was current for the 180 days prior to the refinance application?
    program_review: Does the program account for the §3555.101(d)(3) seasoning test — existing borrowers refinancing must have maintained a current account for the 180 days prior to application?
    file_review: Spot-check refinance files; confirm the payment history shows the account current for the full 180 days before application.
    judgment: false
    feeds: []
    workflow_phase: origination
    owner_role: underwriter
    secondary_owner_role: compliance_officer
    cadence: per-refinance-application
    consequence: ''
    tags:
      - round-c
      - regulator-direct
      - usda
      - rhs-guaranteed
      - refinance
      - payment-history
      - origination
      - promoted
    primary_source:
      tier: 1
      authority: 7 CFR §3555.101(d)(3)(iii)
      source_class: usda-regulation
      source_url: https://www.law.cornell.edu/cfr/text/7/3555.101
      snapshot_id: 26c27fd6e5118ed7
      fetched_at: '2026-05-24T19:34:38Z'
      content_hash: sha256:1f9e807ef8e9a4354b5a7631729e0d4002fcba07953bcf63ec4029391748b3ba
      paragraph_quote: (iii) Existing borrowers seeking to refinance must have demonstrated their ability to meet payment demands by maintaining a current account for the 180 days prior to application .
      drafter_attestation: |
        Copied verbatim from snapshot 26c27fd6e5118ed7 (content.txt) at
        2026-05-24T20:10Z. Substring is the full §3555.101(d)(3)(iii)
        operative paragraph.
    promoted_at: '2026-05-24T20:12:25+00:00'
    promoted_from: usda-7cfr-3555.101-roundc-v1.yaml
  - id: usda-7cfr-3555.101-d3iv-refi-same-property-occupancy
    canonical_id: usda-7cfr-3555.101-d3iv-refi-same-property-occupancy
    section: '7 CFR §3555.101(d)(3)(iv) — Refinance: same property + owned and occupied as principal residence'
    description: |
      The loan security for a §3555.101(d)(3) refinance must include the
      same property as the original loan and be owned and occupied by the
      borrowers as their principal residence.
    type: do
    audit_question: For every USDA Section 502 refinance loan [LENDER] closes under §3555.101(d)(3), can [LENDER] evidence that (a) the loan security is the same property as the original loan, and (b) the borrowers own and occupy that property as their principal residence?
    program_review: Does the program account for the §3555.101(d)(3) security test — the refinance must encumber the same property as the original loan, owned and occupied by the borrowers as their principal residence?
    file_review: Spot-check refinance files; confirm the security is the same property as the original loan and is owned and occupied by the borrowers as principal residence.
    judgment: false
    feeds: []
    workflow_phase: origination
    owner_role: underwriter
    secondary_owner_role: compliance_officer
    cadence: per-refinance-closing
    consequence: ''
    tags:
      - round-c
      - regulator-direct
      - usda
      - rhs-guaranteed
      - refinance
      - same-property
      - origination
      - promoted
    primary_source:
      tier: 1
      authority: 7 CFR §3555.101(d)(3)(iv)
      source_class: usda-regulation
      source_url: https://www.law.cornell.edu/cfr/text/7/3555.101
      snapshot_id: 26c27fd6e5118ed7
      fetched_at: '2026-05-24T19:34:38Z'
      content_hash: sha256:1f9e807ef8e9a4354b5a7631729e0d4002fcba07953bcf63ec4029391748b3ba
      paragraph_quote: (iv) The loan security must include the same property as the original loan and be owned and occupied by the borrowers as their principal residence .
      drafter_attestation: |
        Copied verbatim from snapshot 26c27fd6e5118ed7 (content.txt) at
        2026-05-24T20:10Z. Substring is the full §3555.101(d)(3)(iv)
        operative paragraph.
    promoted_at: '2026-05-24T20:12:25+00:00'
    promoted_from: usda-7cfr-3555.101-roundc-v1.yaml
_promotion_history:
  - promoted_at: '2026-05-24T20:12:25+00:00'
    candidate_path: obligations\_remediation\round-c-type-a\usda-7cfr-3555.101-roundc-v1.yaml
    candidates_promoted: 5
    candidates_skipped_existing: 0

Verbatim regulatory text (5)

Verbatim provisions from 7 CFR §3555.101 — Loan purposes (USDA Guaranteed Rural Housing) — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.

7 CFR §3555.101 — Loan funds must be used for a principal-residence dwelling

Loan funds must be used to acquire a new or existing dwelling to be used by the applicant as a principal residence .

Source: 7 CFR §3555.101 · source URL · snapshot 26c27fd6e5118ed7

7 CFR §3555.101(b)(6)(vii) — Finder's/placement fee prohibition

Payment of finder's fees or placement fees for the referral of an applicant to the lender is prohibited.

Source: 7 CFR §3555.101(b)(6)(vii) · source URL · snapshot 26c27fd6e5118ed7

7 CFR §3555.101(d)(3)(ii) — Refinance: fixed rate not exceeding the original loan rate

(ii) The interest rate of the new loan must be fixed and must not exceed the interest rate of the original loan being refinanced.

Source: 7 CFR §3555.101(d)(3)(ii) · source URL · snapshot 26c27fd6e5118ed7

7 CFR §3555.101(d)(3)(iii) — Refinance: 180-day current payment history required

(iii) Existing borrowers seeking to refinance must have demonstrated their ability to meet payment demands by maintaining a current account for the 180 days prior to application .

Source: 7 CFR §3555.101(d)(3)(iii) · source URL · snapshot 26c27fd6e5118ed7

7 CFR §3555.101(d)(3)(iv) — Refinance: same property + owned and occupied as principal residence

(iv) The loan security must include the same property as the original loan and be owned and occupied by the borrowers as their principal residence .

Source: 7 CFR §3555.101(d)(3)(iv) · source URL · snapshot 26c27fd6e5118ed7