USDA Guidelines – Site and building requirements

1980.313  Site and building requirements

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(a)  Rural area.  The property on which the loan is made must be located in a designated rural area as identified in § 1980.312 of this subpart.  A nonfarm tract to be purchased or improved with loan funds must not be closely associated with farm service buildings.

(b)  Access.  The property must be contiguous to and have direct access from a street, road, or driveway.  Streets and roads must be hard surfaced or all-weather surface.

(c)  Water and water/waste disposal system.  A nonfarm tract on which a loan is to be made must have an adequate water and water/waste disposal system and other related facilities.  Water and water/waste disposal systems serving the site must be approved by a state or local government agency.  When the site is served by a privately owned and centrally operated water and water/waste disposal system, the system must meet the design requirements of the State Department of Health or comparable reviewing and regulatory agency.  Written verification must be obtained from the regulatory agency that the private water and water/waste system complies with the Safe Drinking Water Act (42 U.S.C. §300F et. seq.) and the Clean Water Act (33 U.S.C. §1251 et. seq.), respectively.  A system owned and/or operated by a private party must have a legally binding agreement which allows interested third parties, such as the Lender, to enforce the obligation of the operator to provide satisfactory service at reasonable rates.

(d)  Environmental concerns.  The RHCDS approval official will comply with the siting and environmental requirements contained in subpart G of part 1940 of this chapter.  RHCDS State environmental coordinators will assure that County Supervisors are aware of the environmentally sensitive areas.

(e)  Modest house.  Dwellings financed must provide decent, safe, and sanitary housing and be modest in cost.  A dwelling that can be purchased with a loan not exceeding the maximum dollar limitation of Section 203 (b)(2) of the National Housing Act (12 U.S.C. 1702) is considered modest.  Generally, the value of the site must not exceed 30 percent of the total value of the property.  When the value of the site is typical for the area, as evidenced by the appraisal, and the site cannot be subdivided into two or more sites, the 30 percent limitation may be exceeded.

(f)  Thermal standards.  Dwellings financed shall meet the standards outlined in exhibit D of subpart A of part 1924 of this chapter except for an existing dwelling, if documentation is provided to establish that the actual cost of heating and cooling is not significantly greater than those costs for a dwelling that meets RHCDS’s thermal standards.  If the dwelling is excepted, only the perimeter of the house at the band beam and the heat ducts in unheated basements or crawlspace must be insulated.

(g)  Existing dwelling.  An existing dwelling financed must be cost effective to the applicant including reasonable costs of utilities and maintenance for the area.  Loan guarantees may be made on an existing manufactured home when it meets the provisions of paragraph (i)(2)(i) of this section.

(h)  Repairs.  Any dwelling financed with an RHCDS guarantee must be structurally sound, functionally adequate, and placed in good repair prior to issuance of Form RD 1980-17 except as provided in §1980.315 of this subpart.

(i)  Manufactured homes.  New units that meet the requirements of exhibit J of subpart A of part 1924 of this chapter and purchased through RHCDS approved dealer-contractors may be considered for a guaranteed loan under this subpart.  The Lender may obtain a list of RHCDS approved models and dealer-contractors from any RHCDS office in the area served.

(1)  Loans may be guaranteed for the following purposes when the security covers both the unit and the lot:

(i)  A new unit and related site development work on a site owned or purchased by the applicant which meets the requirements and limitations of this section or a leasehold meeting the provisions of §1980.314 of this subpart.

(ii)  Transportation and set-up costs for a new unit.

(2)  Loans may not be guaranteed for:

(i)  An existing unit and site unless it is already financed with a Section 502 RH direct or guaranteed loan, is being sold from RHCDS inventory, or is being sold from the Lender’s inventory provided the Lender acquired possession of the unit through a loan guaranteed under this subpart.

(ii)  The purchase of a site without also financing the unit.

(iii)  Existing debts owed by the applicant/borrower.

(iv)  A unit without an affixed certification label indicating the unit was constructed in accordance with the Federal Manufactured Home Construction and Safety Standards.

(v)  Alteration or remodeling of the unit when the initial loan is made.

(vi)  Furniture, including movable articles of personal property such as drapes, beds, bedding, chairs, sofas, lamps, tables, televisions, radios, stereo sets, and similar items.  Items such as wall-to-wall carpeting, refrigerators, ovens, ranges, clothes washers or dryers, heating or cooling equipment, or similar items, may be financed.

(vii)  Any unit not constructed to the RHCDS thermal standards as identified by an affixed label for the winter degree day zone where the unit will be located.

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