How do you qualify for a No Down Payment USDA Renovation Loan? – Part 2

How do you qualify for a No Down Payment USDA Renovation Loan in Florida, Texas, Tennessee, and Alabama?

How do you qualify for a No Down Payment USDA renovation loan? Can a USDA No Down Payment renovation loan include home improvements to be completed after closing?

Last week we discussed the USDA Repair Escrow Holdback feature which allowed for certain eligible repairs to be included with a USDA loan for completion after closing. This week we will review the expanded ability available through rehabilitation and repairs with a No Down Payment USDA Renovation Loan.

Today’s topic is great for anyone looking to maximize the available housing inventory while at the same keeping within budget and managing future renovation expenses.

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.

How do you qualify for a USDA Renovation Loan for Non-Structural Repairs up to $35,000?

Under the rehabilitation and repair feature of the Single-Family Housing Guaranteed Loan Program (“SFHGLP”), this allows borrowers to finance the cost of repairs to improve an existing dwelling at the time of purchase. The benefit is for one fixed rate loan to finance both the acquisition cost plus repairs into the loan up to the as-improved market value of the property.

USDA Renovation Loan up to $35,000 in Non-Structural Repairs

Under this feature it allows borrowers to finance up to $35,000 for repairs such as those identified by a home inspector or appraiser. There is no required minimum repair amount. The repairs must be non-structural, and the home must be considered habitable at the time of closing to be eligible for this feature.

Property Eligibility

New construction or incomplete construction types of properties are not eligible and USDA Renovation loans require that the home has been completed for at least 12 months. Acceptable evidence to prove such would include certificate of occupancy or documentation from the local taxing entity.

In situations where the dwelling must be demolished as part of the rehabilitation, USDA guidelines require that the complete existing foundation must still be in place and be utilized. Properties where the foundation has been demolished or where only the footings remain, are not eligible. Evidence by a licensed engineer that the existing foundation is structurally sound and supports the proposed construction will be required.

What type of repairs can be included with a USDA Renovation Loan?

Examples of the type of repairs which can be included within this USDA renovation loan feature would include, but are not limited to, the following:

• Modernizations of kitchens and bathrooms
• Flooring
• Exterior Siding
• Repairs to accessory dwelling units.
• Repairs to existing swimming pools, hot tubs, or saunas
  • NOTE: The installation of new inground swimming pools, hot tubs, or saunas is not permitted.

In order to finance any repairs into a USDA Renovation Loan, the appraised value must be high enough to support the loan amount with the repairs included. Also, the appraiser will initially appraisal the home subject to the repairs being completed. What that means is the appraiser’s initial estimate of value would be “as if” the repairs were completed but this value is subject to the repair work being finalized.

Please note that any repair request is truly on a case-by-case basis depending on the facts of the situation and property. If you are looking to obtain a USDA loan with repairs, having upfront budgets and estimates for the work that will be done will help organize the start of the process.

Join us next week as we further explore the USDA Renovation Loan feature for repairs that exceed $35,000!

As a USDA Approved Lender under the Single-Family Housing Guaranteed Loan Program, we will walk you through the USDA loan qualifying process step-by-step.

As a USDA and VA Approved Lender in Florida, Tennessee, Alabama, and Texas, let our experience and expertise go to work for you!

Just call, email, or text to discuss your scenario and let us show you the “Metroplex” difference!

Toll Free: (800) 806-9836 X 280

Call/Text: (863) 593-2001
SeanS@MPLX.org

Don’t forget to download our USDA Blueprint for Success with this link.