Can a Property on a Private Road Qualify for a USDA Rural Development Loan?
USDA Rural Development Loans and Private Roads
A question I often receive is how would a homebuyer qualify for a USDA Rural Development loan with a property located on a private road. There are specific USDA guidelines for this situation so allow me to explain these, and other helpful tips, further for those interested in a USDA Rural Development loan.
USDA Rural Development Loan Housing Guidelines
The USDA follows HUD (Housing and Urban Development) Handbooks requiring that:
- Each property must be provided with a safe and
adequate pedestrian or vehicular access from a public or private street
- All streets must have an all-weather surface
- Private streets must be protected by permanent easements and maintained by a Homeowners
Association (HOA) or joint maintenance agreement
Also for private roads, as long as it is an all weather surface, it could still be possible provided there are permanent easements and some type of HOA or road maintenance agreement in place. Keep in mind though; all homeowners on the street would have to sign the maintenance agreement.
County maintained gravel roads could also be a good candidate for USDA Rural Development loan financing depending on the condition and that it would meet HUD Handbook guidelines as well as be sufficient for underwriting and USDA approval.
In all cases, remember that the USDA field office will have the final decision but they do rely heavily on the underwriter’s approval and documentation of the file.