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Will a USDA loan allow you to repair a roof?

November 18th, 2016 by Sean Stephens

If a home needs roof repairs, how do you qualify for a USDA loan?

Thankfully, we have encountered this scenario multiple times and have put together a successful formula and today I will walk you through the process step-by-step on how to qualify for a USDA loan if a home needs roof repairs.

As we all know, 2nd opinions are always important, so if you have financing questions and are working with another lender, we offer this complimentary service where you can get access to an expert 2nd opinion and is great for both pre-qualifications and loans that are already in progress.

So, will a USDA loan allow you to repair a roof?  The short answer is no, because updated USDA guidelines now specifically list roof repairs as an ineligible repair to be financed.

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However, through proper planning and communication, my office has successfully navigated this situation in the past, so let’s now go over a recommended game plan.

  1. In many cases if a Realtor, Seller, or Buyer knows that repairs or replacement of the roof will be needed, it may be listed on the sales contract as a condition.
  2. Once identified, a roofing estimate or contractor’s invoice is obtained for the work to be done.
  3. The appraisal would be completed subject to completion of the roof repairs. This means that the value would be determined subject to the completed repairs.
  4. We approve the loan, submit to USDA, and wait for their commitment to return
  5. After that is received, we then update the parties and roof repairs may begin
  6. After completion, appraiser re-inspects property to certify completion of the repairs
  7. Appraisal certification is received, and once approved, the closing process beginsTexas USDA Approved Lender

Now, that we understand the process, here are additional key factors:

  • Customarily the roofer or contractor would agree to accept payment at closing
  • Since we are the approving lender, it allows us to control and manage the process which minimizes the risk involved because we already have loan approval and the USDA commitment before any repairs would be started.
  • Communication is key between parties
  • It may sound complicated, but we have handled many transactions with repair issues that needed to be done, and this has been a successful formula and while we specifically discussed roof repairs today, this could also be a possible solution for other repair types that are ineligible to be financed for completion after closing.
  • As a final reminder, there is risk involved in every transaction, and other lenders may not have systems in place which can allow this type of flexibility. If you have a unique scenario, please use my team as a resource and we can then advise of the potential options.


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