Success with a loan over 5 acres is dependant upon finding a local loan officer familiar with the lenders that will allow this type of property. The appraisal will clearly have to show comparable properties in the area. Your improvement to land valuse ratio will also play a key part.Aug 20th 2012
USDA can be done in the event that the property is located in a designated USDA Rural Developement area and provided that you also qualify for that type of loan. FHA will be ok if the property is under 10 Acres, the land value does not exceed the home value, and the land is not going to be used for agriculture. Best Of Luck!Aug 20th 2012
As James stated.. FHA and USDA allow up to 10 acres, however certain lenders will not lend on more than 5 acres, so although FHA / USDA allows up to 10 acres, not all the lenders out there do.. The best advice I can give you is to contact a LOCAL mortgage broker, not the local "Big" bank, and certainly not one of those 50 states internet lenders...By applying with your LOCAL Broker, you have an advantage because he's familiar with local customs and works with numerous lenders, seeking out the best loan terms for your particular scenario. Because he has lower overhead, he can offer you lower rates and lower fees than most of the larger lenders.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.comAug 20th 2012
The max for VA and FHA is 10 acres. The preponderance of value must be in the home and not the land. Lender overlays may limit the lot size to 5 acres or smaller. By working with a local Mortgage Banker/Broker you will be working with a Professional who can find you the lender that will accept your larger parcel, without you having to do all of the shopping. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ www.LoansA2z.com 888-889-9950Aug 20th 2012
I would advise going right to the horse's mouth if you want correct and accurate information; so here I did it for you: Section 4-4 below is directly from the 4150.2 property valuation (FHA) manual (HUD.GOV) and clause 15 underneath that section is from the USDA FAQ's section answered by the people who determine the guidelines for the USDA program! The important points being the lending institution's Underwriter and the lender's risk management department have to be OK with the scenario, IE, it has to make sense...common and typical for the area doesn't hurt, but it's not necessary...the lot being undividable would certianly help the Underwriter to feel more comfortable. And with USDA, you don't want the value of the land to exceed 30% the total value of the property. Clearly, the Brokers posting below doesn't work with enough lenders since they can't find anyone to go above 10 acres...I work for the Mortgage Division of a large regional bank and we "due" (sic) loans on 10, 20, 30 and 40, etc. acres all the time with no overlays to pricing whatsoever:4-4 UNIQUE PROPERTY APPRAISALS (From the FHA 4150 Manual)Appraisers are sometimes faced with unique properties: a loghome, an extra small home, lower than normal ceiling heights,etc. Eligibility of these properties depends on whether or notthe property is structurally sound and readily marketable. If aproperty meets these criteria, the appraiser estimates marketvalue. However, depending on the uniqueness of a property, thefinal determination to accept or reject the property is made bythe lending institution's underwriter. Excess land is another area in which to exercise caution. Landis considered to be excess if it is: o larger than what is typical in the neighborhood AND o capable of a separate use o If there is excess land, describe it but do not value it. In this instance, the appraisal is based upon a hypothetical condition. A legal description of the portion being appraised is required.USDA FAQ #15Can USDA loans include acreage?Possibly. The acreage must not contain any income producing facilities (eg, a farm) and the value of acreage may not exceed 30% of the total property value.Aug 21st 2012
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