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A USDA home loan with Repairs… Yes, it’s possible!

December 18th, 2020 by Sean Stephens

A USDA home loan with Repairs... Yes, it's possible!USDA guidelines allow for a wide range of possible repairs. In today’s video, I’ll explain the eligible types of repairs and review how it’s possible to get a USDA home loan with repairs.

Also, please download our USDA Blueprint for Success. This educational resource helps break down the USDA process step by step. It’s great for both realtors and home buyers alike!

Improved Guidelines

Previous USDA guidelines did not allow roof and plumbing repair to be escrowed and repaired after closing. However, current guidelines now permit a wider range of eligible repair types and no longer restrict roof or plumbing repairs.

USDA Home Loan with Repairs

FREE USDA home loan GuideEligible types of repairs include but are not limited to:

  • Plumbing, Flooring, A/C Units, and also Roof Repairs
  • Any type of repair that does not affect the livability or safety of the home

Repair costs are not allowed to exceed the LOWER of either 10% of the proposed loan amount or $10,000 whichever is lower.

In addition:

  • Contractor invoice will be required for all repairs
  • No self-help allowed
  • Repair work to be completed within 30 days after closing
  • Appraised value must be high enough to support the new loan amount with repairs
  • Repair funds are then taken from the loan and escrowed with the title company at closing

Also, there is a required 50% deposit of the total repair cost due at the time of closing.  This is allotted to cover any potential cost overruns and can be from either the buyer or seller. However, it cannot be financed.

Post Closing

The term “escrowed” means being able to deposit the repair money into a third party’s account. Usually, it is a title company or closing attorney that holds the funds post-closing until further instructed by the lender to disburse.

After Repairs

After successful completion of the required repairs, a documented final inspection must be approved by the underwriter. The approval releases the funds from the title company to the contractor and the 50% deposit occurs.

In summary, USDA loan repairs are not for full-blown renovations but an escrow repair option. In turn, you can pinpoint specific repair items and allow them to be financed into a USDA loan.

USDA Approved Lender Tampa FloridaRemember, we are a top-ranked USDA Approved Lender with experience and expertise! With the USDA program, we can help homebuyers make the most of their qualifying ability. Simply call or email to discuss your scenario and let us show you the “Metroplex” difference!

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

I want everyone to 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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