Buying a multifamily residence with a USDA loan?

Question

Hello,

I was wondering can you purchase a mutifamily home (duplex, triplex or quad) as an owner occupant residence with a USDA home loan?

Thanks!

Al Marchena · Answer

Hi Shawn,

Did you find financing for the 4-plex via USDA?

Shawn Cagle · Answer

I've been researching this for myself and I don't think it's possible to use a USDA loan on a 2,3,4 plex. Single family is restricted to single family, no income generation. And multifamily is 5 units or more. I'm calling my local office tomorrow to find out.

Paul Merriwether · Answer

@Tammy Wadlington Multifamily USDA loans are available. Google USDA loans

Tammy Wadlington · Answer

Dion, I'm not finding any support for this.  There is a multi-unit property that I'm interested in purchasing and a USDA loan would be great but all the mortgage websites say that you cannot purchase any income-generating property.

Matthew T. · Answer

Oh thanks! I didn't know you can use USDA properties as investments.

Dion DePaoli · Answer

Sure.  It is presumed that "Multifamily" housing will have multiple families inside.  (opposed to Single Family)

Matthew T. · Answer

Thanks Dion for your response! What about while I live there I wanted to rent out the other unit or units, is this allowed under USDA?

Dion DePaoli · Answer

The answer is Yes, you can.  That said, you will need to make sure the property meets the definition of rural first.  
	
	For instance, and in brief only using one concept (not meant to be the full list of criteria), a rural property has a population restrictions and proximity to Metropolitan Service Areas ("MSA" - think big city area) as some restrictions.  As such, it may be harder to find multi-unit housing in those areas to begin with.  But if you can find the property which can qualify as rural, then you can finance.
	
	As an example, farm labor housing is multifamily and there are specific programs inside the USDA portfolio which target those types of properties.  (Just giving an example of MF in a rural idea setting, not all programs require all tenants to work on a farm).  They also have rental supplement programs which can work with programs like Section 8.  Again, the idea there is farmhands [in general and past] tend to not make lots of money.