I need advice about USDA Loans.

2 Replies

Hello,

I think I qualify for a USDA loan, but I don't know how to be sure (other than apply). I know the property qualifies. However, the tricky part is I currently have an FHA loan and my first year of living in it is not up until November (I do not want to sell it). But I don't think this property I want want to buy will wait for me. Does anyone know how long after closing I can wait to move in for an USDA? I never saw anything saying you can't get an USDA loan if you already own something, but can you? I read that you can sometimes get extra for a renovation (and maybe that could delay my move in), but how does that work, and how big does the rehab have to be? (Could just re-doing one bathroom work?)

Any advice welcome.

Julia Ferris

@Julia Ferris you 100% need to speak to a loan officer about this. Buying another home within your first 12 months of owning your current primary home will be looked at very closely. They will ask "why are you moving" and will be looking for some very specific reasons to do this. And USDA loans do not offer a "renovation" loan. Those are FHA/Fannie/Freddie loans. USDA will also have location restrictions...I'm assuming the location of the property fits though. Please do get with a loan officer right away please.

@Julia Ferris I was in a similar boat not to long ago. I ended up opting out of the USDA loan for a few reasons: 

1. USDA loans are specifically for lower income applicants in rural areas intended as a primary residence. They do not accept multi-unit homes (turn off for me). 

2. You can use some funds from USDA to rehab, but its limited to 10% of the loan amount, or 10k, whichever is lower. For the properties I look at, 10k generally would not be enough to do a proper rehab.

As far as owning other properties, I don't believe there is a hard or fast rule, but owning a cashflowing rental might disqualify you as an applicant as far as income/networth is concerned. The second thing to consider is that you have to move into the USDA property within 60 days of your loan closing.

You might want to look into a HML or Bridge loan if you need some kind of short term financing (until you get out of your first property), though without the specifics of the 2nd deal, its hard to say what exactly will work for you. Once you get out of your first property and into your second, you might be able to refinance it into a longer term loan.

All that said, definitely speak with a loan officer for specifics to your own situation. I have a reference if you're serious about figuring out how to do both properties. 

Good luck!