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Do I understand correctly that an applicant for a USDA loan CANNOT own other property?

by connors566 from , California. Jul 11th 2017 Reply


Heath Schneider (heathloan@gmail.com)
#57 ranked lender in Nevada - 8 contributions

You can own another property, however, your USDA loan application must be for a home you plan on using as your primary residence. Therefore, the home you own now must be figured into your debt to income ratio but owning a home does not disallow you from purchasing a home with a USDA loan.

Jul 11th 2017
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,560 contributions

Your correct answer is that generally you can't own another home when purchasing a home with USDA, BUT there are a few exceptions THAT DON'T APPLY to most people. Generally, borrowers must sell the old (existing) property, meaning at a minimum they have a sales contract with a verified closing date prior or simultaneously to the new loan closing. Sometimes, there are circumstances where retaining the existing home (outside of local commuting area) MAY be acceptable: If an individual or family has been transferred or found employment in a different state, and their old residence is not in the local commuting area of their new employment location, they meet the requirement of not owning a dwelling in the local commuting area. The applicant must..."Be a person who does not own a dwelling in the local commuting area or owns a dwelling which is not structurally sound, functionally adequate." Example: If an individual or family has been transferred or found employment in a different state, and their old residence is not in the local commuting area of their new employment location, they meet the requirement of not owning a dwelling in the local commuting area. Example: If the home has documented structure, safety, or sanitation issues, or if it is a manufactured home not anchored on a permanent foundation, it would not be considered structurally sound or functionally adequate. I do a LOT of USDA loans for properties located in MN, WI, and SD. Visit me at www.JoeMetzler.com/usda

Jul 11th 2017
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