If so, you may be eligible for a mortgage through the USDA rural development program. There are several restrictions and guidelines which need to be considered when shopping for a home in a rural area including income and address guidance. You can find more about USDA mortgage loan eligibility here.
Another tricky guideline, for residence of Arizona and California, is the swimming pool restrictions on USDA loans.
For years properties that included an in-ground swimming pool were deemed ineligible for a USDA Rural Development Loan. This guideline has recently changed over the last few years, however, there are specific guidelines and math which needs to be applied.
For properties that include an in-ground pool the appraiser must determine the value of the property with and without a pool. The appraiser must justify their determinations of value. This may include the use of additional comparable homes of similar size but without a pool. Essentially the appraiser is providing the value of the home as-is with the pool and a value of the home based on the assumption that it didn't have a swimming pool.
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| (Image: www.guy-sports.com) |
If the purchase price of the house exceeds the value of the property without the swimming pool the difference must be paid for by the buyer. For example the following generic scenario:
Scenario example:
- Sales Price $100,000
- Property appraised value including pool: $105,000
- Property appraised value excluding pool: $95,000
- Value added with pool by appraiser: $10,000
- Maximum base loan amount: $95,000
- Down payment required by borrower at settlement: $5,000
- The current up-front guarantee fee for purchase transactions is 2 percent, an amount which can be included in the loan. The maximum loan amount would be $95,000 plus the two percent guarantee fee.
So, for properties in sun states, such as Arizona and California where swimming pools are more common, the Buyers Agent should review comparable sales of similar houses without an in-ground swimming pool to ensure that purchase price of the house their Client is making an offer on can be supported by the appraisal report based on these guidelines.
(Source: USDA RD AN 4701)
Until Next Time,
Craig Turley
Contact Craig today if you have a question about USDA mortgage eligibility or any other program questions which may benefit you as a Realtor or Borrower. Allow Craig's 20 years of mortgage and finance experience benefit you!
Until Next Time,
Craig Turley
Contact Craig today if you have a question about USDA mortgage eligibility or any other program questions which may benefit you as a Realtor or Borrower. Allow Craig's 20 years of mortgage and finance experience benefit you!
