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How to Qualify for a USDA Loan before Selling Your Current Home?

March 17th, 2012 by Sean Stephens

USDA Eligibility Requirements while Your Home is still on the Market

To qualify for a USDA loan you must meet several USDA eligibility requirements in order to maintain eligibility while your home is still on the market. This week’s video tip is beneficial if you are a Realtor working with a client in this situation or a buyer attempting to purchase another primary residence with USDA financing before your current home is sold.

USDA Eligibility When Selling Primary Residence

Per USDA1980-D:

  • The USDA loan program cannot be used for second homes or investment properties. The program can only be for primary residences located in areas that meet USDA eligibility.
  • If an existing primary residence has not sold: Will require local RD (Rural Development) office approval
  • Property superiority conditions must be met. This includes any of the following: Upgrading from a manufactured home to a SFR (Single Family Residence), increase in family size requiring a larger home or the current residence is outside of a reasonable commuting distance due to employment change, relocation, etc. This is defined as 50 miles or greater.
  • The buyer must still be able to meet USDA eligibility requirements with both housing expenses if the prior residence has not yet sold


Successful communication between all parties will be necessary in this situation in order to determine if a buyer can meet all USDA eligibility requirements while their home is still on the market.

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