Can a USDA No Down Payment Loan Finance an Adjoining Lot?
Can a USDA No Down Payment Loan Finance an Adjoining Lot in Florida, Texas, Tennessee, or Alabama?
When working in rural areas, it can be common to have properties where there is a vacant lot next door to the home you want to purchase. The next question is whether a USDA No Down Payment Loan can be used to finance that adjoining lot.
However, realtors and homebuyers must be cautious because there is tremendous misinformation spread on today’s topic. In today’s short video, I will separate fact from fiction and explain how a USDA No Down Payment Loan can be used to finance an adjoining lot in Florida, Texas, Tennessee, or Alabama.
If you have not yet done so, don’t forget to download our USDA Blueprint for Success with the link below. This Free Guide is designed to help walk you through the USDA process and is a great educational resource for both homebuyers and the real estate community!
Can a USDA No Down Payment Loan Finance an Adjoining Lot?
Current USDA guidelines provide flexibility for buyers and sellers who want to finance vacant lots or parcels that are connected to the property.
While it is possible for a USDA No Down Payment Loan to finance an adjoining lot, there are recommended steps along with USDA guidelines that must be followed.
How do you finance the lot next door when purchasing a home with a USDA Loan?
While this is not a comprehensive list, here are key points to remember when a using a USDA No Down Payment Loan to finance an adjoining lot:
The lots must be adjoining (connected).- If the lots have not yet been combined, you must separately list each parcel ID on the same sales contract.
- The appraiser will include both parcels in the value.
- The total site size must…
- Be typical for the area,
- Be predominantly residential in use, character, and appearance,
- And the site must NOT have land or buildings principally used for income-producing purposes.
- Both lots will need to be included in the final survey.
Please remember that USDA guidelines require that “Vacant land or properties used primarily for agricultural, farming or commercial enterprise are ineligible” and that a “qualified property must be predominantly residential in use, character and appearance.”
USDA Flexibility
In summary, while USDA loans can be flexible when trying to include an adjoining lot, other loan programs or lenders may require the parcels to already be combined prior to the sales contract being executed and/or the appraisal being completed.
As rural housing experts, rely on our expertise and clear communication to help navigate this type of transaction
USDA Approved Lender
We realize that qualifying for a USDA Loan may seem overwhelming, but we offer the unique experience and expertise to help with each step of the process. Additionally, as a USDA approved lender we have the dedicated experience and expertise to help maximize your qualifying ability and make the most out of this powerful program.
Remember to just call or email to discuss your scenario and let us show you the “Metroplex“ difference.
Email: SeanS@MPLX.org
Call: (800)806-9836 Ext. 280
As always, I want everyone to make it a great day and I look forward to seeing you right here for next week’s USDA Video Tip!
