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Can you finance an additional lot with a USDA loan?

November 13th, 2015 by Sean Stephens

Can you finance an additional lot with a USDA loan?

So what can be done, when a buyer wants to purchase the lot next door to the home they are buying? When trying to finance an additional lot with a USDA loan – Realtors and Home Buyers must be aware!

In today’s short video we will discuss how recent guideline changes help when you are trying to finance the lot next door to the home you are buying.

So, how do you finance an additional lot with a USDA loan?

When additional lots are part of the transaction this is a topic unique to each loan program and today we will discuss what options are allowed when you want to finance an additional lot with a USDA loan.  Can you buy the lot next door with a USDA loan

Previously, there was a 30% limitation of land value when compared to the total overall appraised value – however, this has been removed under the USDA 3555 guidelines which now provide for greater flexibility in both lot and acreage scenarios.

Here are Key Points to remember when trying to finance an additional lot with a USDA loan:

  • Lots must be adjoining (connected)
  • The appraiser must include all parcels in the value for lending purposes
  • Ideally, both parcels will already be combined prior to the appraisal being completed – but if not, remember to list all parcel IDs on the same sales contract.(NOT two separate contracts)
  • Please also note that while USDA can be flexible with this, other loan programs may require the parcels to already have been combined prior to the sales contract and appraisal being completed.
  • Site size must be typical for the area, and
  • Comply with all zoning and use restrictions

In summary, it is possible to finance an additional lot with a USDA loan, but proceed with caution and treat each scenario on a case by case basis.Can you buy the lot next door with a USDA loan

As always, communication is key, so let my team know as soon as possible so we can help put a plan together.

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