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I have a home in Wyoming with a USDA loan on it. I am moving out of state and want to buy again but will likely not be able to sell the home for what I owe. I don;t want to short sale so can I rent the current home that has a USDA loan on it? I am told USDA doesn't allow it. by pippir_366_257 from Roy, Utah. Jun 8th 2012 Reply


Brett Pehrson (brettpehrson)
#19 ranked lender in Utah - 226 contributions

I don't believe there is any specific clause that states you can't eventually rent it out. I just closed a USDA loan and don't recall ever seeing anything like that in the closing package. But you would have signed a document stating you intended to occupy the property for at least 1 year after closing on your USDA loan. There may be some confusion, as the scenario you're suggesting DOES apply to Utah Housing loans at any time you carry the loan.

Jun 8th 2012
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 6,881 contributions

Read your note.. it should detail your occupancy requirements, and my guess is that so long as you have lived there for at least a year, and your move is necessary, you should be ok to rent it out... so long as the payments are being made on time, you should be ok.. if you want ot know for sure, you should contact a real estate attorney. 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.com

Jun 9th 2012
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,081 contributions

I've never seen a note that prevents you from renting out the property after you've lived there at least one year. The "don't allow" is at the time of purchase. USDA does not offer investment loans.

Jun 10th 2012
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Team Best Mortgage Option- Michelle Curtis Loan Originator NMLS 401173 (EmbassyFundingLLC)
#28 ranked lender in New York - 2,236 contributions

As long as the bank is getting their money on time I wouldn't think it would be an issue but I would look through your loan docs to be sure. All the best!!

Jun 8th 2012
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Linda Wintersteen (Linda123)
#65 ranked lender in Arizona - 1,183 contributions

I would be very careful, i have working for numerous lenders, and yes, they do go and knock on doors ,and if they get a whiff of something not right, they can call the note.. I worked with the private investigators at certain banks.. the best advice I c an give you, if NOT TO CHANGE your bank, or bank address ... that is a dead give away...

Jun 9th 2012
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DOUG CAPPS (DOUG CAPPS)
#1 ranked lender in Mississippi - 184 contributions

Hi Roy,There may be a different answer if you have USDA Direct Loan versus a USDA Guaranteed Loan. On the USDA Direct, you would need to contact your local USDA office. If you have a USDA Guaranteed loan, USDA is not going to penalize you if you have to "move" out or relocate and rent out your property. USDA is a make sense loan, but they also don't want you to intentially have multiple rental properties.

Jun 11th 2012
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Mark Simon (mark.simon)
#10 ranked lender in Delaware - 83 contributions

What state are you relocating to ? Give me a call and we can help expedite the process of financing your new home.Mark 800-485-1387 Extension 107

Jun 11th 2012
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