Private Roads: How do you qualify for a mortgage with a house on a private road?
Once you have found the perfect home, what should you do if the property is located on a private road? How can a private road affect your mortgage approval?
Thus, today’s video will discuss what to do when the property is located on a private road, the important steps to take to help secure your financing, and explain the private road requirements of USDA, VA, FHA, and Conventional loans.
Since we are comparing different loan types, you should also download our FREE Comparison Chart which compares USDA, VA, FHA, and Conventional loans on one convenient chart side by side!
Private Road Financing – 3 Steps to remember
The major distinction between a public road and a private road is that a private road is maintained at the expense of the individual and not the public. However, do NOT assume that the road is classified as private just because it may be dirt or unpaved. In fact, many counties have a variety of classifications for road types and it’s always best to make the extra call and double-check.
In turn, no matter the loan type, follow these three steps when the property you are interested in is located on a private road:
Step 1
Call your local county roads & bridges department to confirm the exact type of road classification.
Step 2
If a private road, then make sure that the lender, bank, or broker handling the mortgage is experienced with private roads and can properly determine what programs are available.
Step 3
If required, follow up with the closing attorney or title company handling the transaction to help determine the following:
- Are there recorded easements?
- Is there a recorded maintenance agreement? This may be required depending on the type of mortgage. See below.
Special Requirements
Once the steps above are completed, it is vital to note the requirements for each loan type:
- Conventional Loans: Fannie Mae will require a private road maintenance agreement, but Freddie Mac guidelines do not. Check with your lender if they have the ability to work with Freddie Mac programs.
- VA Loans: require a recorded maintenance agreement, but this requirement may be waived with VA approval.
- FHA Loans: do NOT require a private road maintenance agreement.
- USDA Loans: do NOT require a private road maintenance agreement.
- However, additional criteria will apply for both FHA and USDA loan – call my office for more details!
In summary, NEVER assume a road’s classification or program requirements. Even if the property is located on a dirt road, it does not automatically mean that it is a private road.
Whether it be USDA, FHA, VA, or Conventional loans just call or email to discuss your scenario and let us show you the “Metroplex” difference!
(800)806-9836 Ext. 280
SeanS@MPLX.org
Lastly, download our FREE Loan Comparison Chart to see the basic features of USDA, FHA, VA, or Conventional loans conveniently compared to each other. Download it now!
