USDA Incentives for a house hack? Possibile???
Hello all, I am in the works of making my first real estate move. I have my eyes on a mulit-unit home. I do plan to live in the home and rent out the other unit on the lot. My LO mentioned a USDA incentive that pretty much pays for the down payment and closing costs for low income communities. I know that program requires you to live in that home but my question is for how long? Do I have to live in the property til I pay off the mortgage? Is there any loops of some some sort? Thank you in advanced.
Hi Jose!
I love seeing other investors from Fresno on the platform! From my understanding, the residency requirement for a USDA is only one year. The rule is that you have to move into it within 60 days and live there for at least a year without moving out. You're not required to be there for the whole loan.
As for a loophole, the only one is not telling the lender or the USDA that you're not living there and hope that no one checks up on it. They almost never do and a lot of people take this risk. They usually just have the mortgage bill and tax bill still go to the property rather than their true mailing address. I, however, am not comfortable with that kind of risk and I personally don't recommend to any of my clients to do that.
Quote from @Gurbeer Sangha:
Hi Jose!
I love seeing other investors from Fresno on the platform! From my understanding, the residency requirement for a USDA is only one year. The rule is that you have to move into it within 60 days and live there for at least a year without moving out. You're not required to be there for the whole loan.
As for a loophole, the only one is not telling the lender or the USDA that you're not living there and hope that no one checks up on it. They almost never do and a lot of people take this risk. They usually just have the mortgage bill and tax bill still go to the property rather than their true mailing address. I, however, am not comfortable with that kind of risk and I personally don't recommend to any of my clients to do that.
Same here! It's extremely rare to find someone investing in real estate from this area. Thanks for the reply. I do not mind living there at all. I was just concerned with the USDA regulations. My other question is if you could spare the time, does USDA programs apply to only FHA loans or conventional loans as well?
USDA, FHA, and conventional are all different types of loans. USDA and FHA are run by two very different federal programs. So if you get a USDA loan, it is going to be it's very own ballgame. I can get you in touch with my mortgage broker and he can explain all the programs to you in the most crystal clear way
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Hey Jose,
Is your Loan Officer experienced in closing USDA loans? They definitely require a specialized skillset. If you are looking for DPAs, you would have an easier time doing an FHA Downpayment Assistance instead of that USDA. That's assuming it is no more than 2 units.