USDA Acreage Limit: How many acres can you finance with a USDA loan?
With more and more buyers looking in rural areas, many of them also inquire about options for acreage and how much can be financed with a USDA loan.
Well, the good news is that updated USDA guidelines now permit improved flexibility with the amount of acreage that may be financed with a USDA loan.
In today’s video, we will discuss the details and explain USDA eligibility guidelines for those acreage situations.
Before I get started, please download our FREE guide USDA Blueprint for Success. With this guide, homebuyers and realtors alike will learn must-know details about the USDA qualifying process!
It is important to note that the USDA Rural Development Single Family Housing Guaranteed Loan Program (SFHGLP) is designed for Single Family Housing. It is not for working farms or income-producing properties.
USDA Acreage Limit
USDA Guidelines previously had the following guidelines when the site value exceeded 30% of the total overall appraised value:
- The value of the site must be typical for the area, as evidenced by the appraisal; and
- The parcel cannot be subdivided into two or more sites.
For example, if you had a property that appraised for $100,000 and the appraiser noted that the site value of the appraisal was at $35,000. Then that portion would be at 35% of the appraised value which would exceed the 30% guideline. This would then require both of the mentioned steps above to be met in order to proceed.
Updated USDA 3555 guidelines are now more simplified when it comes to USDA acreage limits. Under the current site size guideline requirements it now states:
“The site size must be typical for the area.”
Thus, there is technically no maximum USDA acreage limit. This clarification clearly opens up the potential for larger acreage properties. Plus, it no longer requires the burden of documentation if the property could be subdivided.
Ready for Acreage?
In summary, don’t assume USDA loan eligibility in cases of acreage. In fact, comparable sales in the area can be used to help justify the size of the property.
When determining how many acres you may qualify for, remember that increased acreage can require additional review upfront.
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Lastly, don’t forget to download our USDA Blueprint for Success. Make it a great day and I look forward to seeing you for the next tip of the week!