The USDA Rural Housing Service has issued updated guidance for multifamily housing owners and property managers preparing their 2026 operating budgets. This detailed guidance emphasizes the importance of cost-effectiveness and responsible management of taxpayer funds, while ensuring that rural residents have access to safe and decent housing.

Key Budget Principles

The Rural Housing Service is reinforcing its commitment to fiscal responsibility by requiring all Section 515 project owners to focus on cost savings, minimize waste, and ensure every expense benefits residents without unnecessarily raising operating costs.

Budget projections should be realistic, reflecting the property's history, current status, and local market conditions. All proposed expenses must clearly benefit residents and be reasonable and necessary costs for property operations.

Critical Submission Deadlines

Property owners must submit complete budget packages according to these timelines:

• 90 days before the fiscal year start if requesting rent or utility allowance changes
• 60 days before the fiscal year begins if no rent or utility allowance changes are needed

Required Documentation

A complete budget submission must include:

1. Form RD 3560-7

• Must be completed per official instructions
• Properties with 8+ units must submit through the MINC system

2. Comprehensive Budget Narrative: The narrative should provide:

• Brief project description and overall status indicators
• Statement of project compliance, including any outstanding monitoring findings and progress updates
• Explanation of projected capital expenditures and reserve withdrawals
• Description of the project's financial status and contributing factors
• Justification for any proposed rent or utility allowance changes

3. Utility Allowance Documentation

• Required per Handbook guidelines and CFR regulations

4. Handbook Letter 203

• Required if proposing rent or utility allowance changes
• Must be provided to tenants and posted in common areas

5. Capital Needs Assessment (CNA)

• Required if requesting a Replacement Reserve deposit increase
• Must be Agency-approved and document future capital needs

6. Additional Supporting Documentation

• Any other materials necessary to justify proposed expenses or changes

Management Fees and Certifications

Important: Management fees for 2026 remain the same as those for 2025, as detailed in Handbook Chapter 3, Attachment 3-F.

If your current Management Certification expires at the end of the fiscal year or has already expired, you must complete and submit a new certification for approval.

Special Considerations

HUD Section 8/515 Properties: HUD will notify both Rural Development and property owners of new contract rents. Owners should confirm receipt of this information with their Servicing Official.

Service Coordination: This remains an eligible expenditure for the 2026 budget cycle. Properties considering adding service coordination should assess resident needs and the availability of community services.

Getting Help

If you have any questions about budget requirements or submission procedures, you can contact your assigned servicing specialist. You can find contact information for specialists by region on the USDA website under "MFH Property Assignments by Region."

The Rural Housing Service highlights the importance of submitting budget materials on time and preparing them carefully. This cooperative approach helps ensure the ongoing availability of affordable housing while being fiscally responsible to taxpayers.

Property owners should review all referenced handbooks and regulations for complete guidance. This summary is provided for informational purposes only and does not supersede official USDA documentation.