Do USDA loans have an acreage limit?

Is there an acreage limit with a USDA Rural Home loan?

When working rural areas, it is common to ask how many acres can you buy with a USDA loan? Thankfully due to updated guidelines, it is now a more simplified process when it comes to reviewing USDA Home Loan acreage requirements.  

With the improved guidelines, it has opened up USDA No Down Payment flexibility for properties with increased acreage and also allow for a wider variety of property types to be eligible for USDA loan eligibility.  

Today’s video tip will shed light on how many acres can are allowed with a USDA Rural Home Loan.

So, how many acres can you finance with a USDA Rural Home Loan?

While it is true that there are numerous programs under the USDA umbrella and it may seem natural to connect the words USDA with acreage, when dealing with the USDA Single Family Housing Guaranteed Loan Program there are important facts to understand.

As a point of clarification, the USDA program is designed for Single Family Housing and is not a solution for working farms or income producing properties.  With that being said recent improvements have been made to the guidelines covering allowable land value.

USDA Guidelines previously had the following guidelines when the site value exceeded 30% of the total overall appraised value:

1) The value of the site must be typical for the area, as evidenced by the appraisal; and

2) 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 thus exceeding the guideline.  This would then have required both of the mentioned steps to be met in order to proceed.

However, a very key point that has been clarified in the new USDA 3555 guidelines.  It simply states the following under the site size guideline requirements: 

“The site size must be typical for the area.”

This simple clarification clearly opens up the potential for larger acreage properties without the further burden required to document if the property could be subdivided.

In summary, do not assume in cases of acreage that it may or may not be eligible for a USDA loan.  Comparable sales in the area will help to justify if the site value is typical for the area.    

When determining how many acres may qualify with a USDA loan, remember that increased acreage can require additional review upfront, so if you have any questions contact my dedicated team so we can help determine how many acres may be eligible with your next USDA loan. 

800-806-9836 Ext. 280
SeanS@MPLX.org

Remember, if you need help or a have question that is what we are here for, so just call or email to discuss your scenario because we are known for returning calls, replying to emails, and responding to your messages.

Now, wouldn’t it be nice if everyone did that!