How do you qualify for a No Down Payment USDA Repair and Renovation Loan? – Part 4
How do you qualify for a No Down Payment USDA Repair and Renovation Loan in Florida, Texas, Tennessee, and Alabama?
What are USDA renovation loan contractor eligibility and approval requirements? Can you include home repairs with a USDA loan?
In Part 1 of our No Down Payment USDA Repair and Renovation series, we reviewed the USDA Repair Escrow Holdback feature which allows for certain eligible repairs to be included with a USDA loan for completion after closing.
In Part 2, we then discussed the expanded ability available through rehabilitation and repairs with a USDA Renovation Loan for those repair amounts up to $35,000.
Then, in Part 3, we reviewed USDA renovation options for those which exceed $35,000.
In today’s short video, we will wrap up our series on USDA Repair and Renovation loan contractor eligibility and approval requirements.
Now, before we get started, don’t forget to take advantage and download our USDA Blueprint for Success with the link below. This free guide is designed to walk you through the process step-by-step and is a great tool for both homebuyers and Realtors alike.
No Down Payment USDA Repair and Renovation Loan Contractor Approval Requirements
USDA Guidelines state the following for Contractor-Builder approval requirements under a USDA Renovation Loan:
“Unless otherwise specified, the rehabilitation and repair construction loan process should be closed and managed following the same procedures described in the single-close feature for new construction.”
Today’s subject is a great cross-over topic since these requirements mirror what I have discussed in prior posts involving the USDA Construction to Permanent Single-Close feature which allows for a no-down payment construction with draws provided to the builder after closing for construction of the home.
Additionally, USDA guidelines include the following description for contractor-builder approval requirements:
“A key to the success of the loan feature will be the financial stability and reputation of the builder constructing the home.
The approved lender and their agent, if any, will be responsible for approving participating builders.
Each builder seeking to participate will be subjected to a process that involves license verification, insurance validation, credit examination, reference verification and a criminal background check. Minimum credit examination will include obtaining a commercial credit report on the business.
USDA Renovation Loan Contractor Approval Requirement Checklist
- Two or more years of experience building and constructing all aspects of single-family dwellings similar the type of project being proposed;
- Evidence of a state-issued construction or contractor license, as required by state law or local law;
- Evidence of commercial general liability insurance with a minimum coverage of $500,000;
- The builder/contractor must have an acceptable credit history being free of open judgments, collections or liens related to previous construction projects. The builder/contractor must not have a previous felony criminal record. A background check will be performed as part of the verification process.
- This information may be obtained by such means as an individual credit report, business report, information published by the Securities and Exchange Commission (SEC), State Corporation Commission (SCC), LexisNexis, or Dun and Bradstreet; and
- Contractors or builders who are constructing their own residence are ineligible.
As a USDA Approved Lender, we will walk you through the USDA loan qualifying process step-by-step. Just call or email to discuss your scenario and let us show you the “Metroplex” difference!
(800) 806-9836 X 280
Thank you again for forwarding and sharing today’s topic with any friends, family, co-workers, or clients who are looking to purchase or build a home!
P.S. – Remember to CLICK HERE to download your Free USDA Blueprint for Success!