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What properties qualify for a USDA loan?

November 3rd, 2017 by Sean Stephens

When is a property NOT eligible for a USDA loan?

It can be equally as important to understand when a property DOES NOT qualify for a USDA loan, as to what type of home DOES qualify for a USDA loan.

Today’s topic is a common question that I receive from both Realtors and homebuyers, and in this short video I will break down the details so you will be in the know and to help keep your transaction from falling off the tracks.

However, before we get started, don’t forget to take advantage of our complimentary 2nd Opinion Service “SOS“, where you can get access to an expert opinion which is designed for the USDA pre-qualification process and for those loans already in progress.

What properties qualify for a USDA loan?

With USDA Rural financing highlights such as flexible credit guidelines, 100% financing, plus the ability to finance closing costs, it can be easy to focus on these sought after benefits and thus minimize the importance of what properties actually qualify for a USDA loan.

Tampa FL USDA Approved Lender

Many times, it can be just as important to understand what homes do NOT qualify for a USDA loan, as to what type of properties DO qualify for a USDA loan.

Initially, it is important to remember that the USDA Rural Home Loan Program does NOT have set loan limits like Fannie Mae, Freddie Mac, or FHA, because the maximum loan amount is determined on what the applicant is able to qualify for.

Additionally, it may be common to automatically assume that higher priced homes are not eligible, but that is simply false! Homes that are in subdivisions, gated communities, and even townhomes could all be considered a type of property that qualifies for a USDA loan, assuming that they are in a USDA eligible area.

Starting 12/1/14,  USDA guidelines were modernized and overhauled.  Along with that came the much anticipated change to the old USDA guideline with regards to in-ground pools.  As a result, homes with in-ground pools are eligible for a USDA loan without any restriction.  However, I still talk with Realtors and homebuyers that are not aware of this change, so please make sure to spread the word that this previous guideline is thankfully a part of the past!

Also, USDA guidelines indicate the following as NOT being considered eligible for a USDA loan

  • The purchase of an existing manufactured home in most cases is not permitted
  • Investment Properties or 2nd Homes (USDA Loans are only eligible for primary residences),
  • Vacant land or properties used primarily for agricultural, farming or commercial enterprise are ineligible.
  • The Purchase or improvement of income-producing land or buildings that will be used principally for income producing purposes is not allowed.

While this is not an all inclusive list, it is important to point out that the property which qualifies for a USDA loan must be predominantly residential in use, character, and appearance.Tampa FL USDA Approved Lender List

As you can see, the USDA loan program can be extremely powerful, however be careful you are working with a lender who has a proven track record of success under this unique program.

As a USDA approved lender, we are here to help. Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

(800)806-9836 Ext. 280
SeanS@MPLX.org

Let’s make it a great day, and I look forward to seeing you right here for the next tip of the week!

 

 

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