The following general guidelines were provided by USDA Rural Development and are not meant to give the entire USDA loan guideline package – just the highlights of what it takes to qualify for a USDA loan.
Compared to an FHA or conventional loan, the USDA rural housing loan has specific requirements as to USDA loan property eligibility. Let’s look at what makes up USDA loan requirements.
The most important consideration is that the property is located in a USDA eligible community. The USDA uses census data and/or distance from metro areas to determine property eligibility. In general, the property must be in a rural area, which includes open country and towns with a population of 10,000 or less, and in certain conditions, towns and cities. Check out the USDA loan property eligibility calculator at the USDA site.
USDA property eligibility – What types of properties can qualify?
- Existing or new construction homes
- Townhouses and Condos
- Existing or new modular homes
Properties that can qualify with restrictions
- Existing properties in need of minor repairs. If the property needs repairs, the cost can be financed into the mortgage so long as there is an estimated cost and time frame for the completion of the repairs.
- Properties with swimming pools. These are allowed, but the loan amount will be based on the property value minus the value of the swimming pool.
- Manufactured housing. You may be able to fund new manufactured housing that is on a permanent foundation. Inquire with your lender about this type of housing.
What types of properties are ineligible?
- Farms and hobby farms.
- Existing manufactured housing. There are very few lenders that will underwrite and fund a manufactured home.
- Duplexes or other multi-unit properties.
- Property located on a dirt road. An all-weather surface is required.
- Property with hauled water. The exception is on Indian Reservations.
- Properties where the site value is more than 30% of the total appraised value.
The home you’ve always dreamed of may be in a USDA approved area. To see if you might qualify for a USDA Rural Home Loan, take 2 minutes and apply right now.