For USDA loans, you don't need a down payment.
USDA loans are created by the United States Department of Agriculture and Rural Developments to help improve quality of rural life. The loans help both communities and individuals in rural areas; they can be used to purchase, build, renovate or relocate a home. There are different kinds of USDA loans and your home has to meet certain requirements to be approved for a USDA loan.
Types of Homes Approved for USDA Loans
USDA loans are available for you if you are low income and are looking to either purchase a new house or repair an existing house. According to the USDA Rural Development website, guaranteed and direct loans can be made on either new or existing homes that are structurally sound, functionally adequate and in good repair.
Your house can be any size; however it must be located in rural area with a population of 10,000 or less, and some towns and cities with populations of 10,000 to 25,000 people. The Self-Help Housing Loan provides materials and labor to those people who want to build their own house.
Types of Sites Approved for USDA Loans
If you are granted a USDA loan to build your own house, the building site you choose must also meet certain requirements. The USDA rural development program says the ideal site must be adequate in size, but not big enough to be subdivided. The value of the site cannot exceed the loan amount. The potential site also has to have adequate water and wastewater systems.
Prohibited Properties
According to USDA Loans website, any sort of farm or farm related houses are not eligible to be included in the loan. The house cannot be an existing manufactured housing structure; it also cannot be a duplex or a multi-unit property. Your property cannot be located on a dirt road, and it must have its own water system.
The value of your site cannot exceed more than 30 percent of your overall appraised value.
Properties with Exceptions
The property is required to have an adequate water system within the property. However, if you live on any of the Indian Reservations, your house may qualify even if you haul your water. You can have a swimming pool, on your property but your loan amount will be based on your property value minus the swimming pool value.
Your house may qualify if it needs minor repairs since the cost can be financed into your mortgage if you know the cost of the repair and time frame required to fix it.
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