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08-08-2011 07:04 AM
Hi there. Hubby and I are currently making long-term plans as to what we'd like to do about buying a house/homestead in the future. We are hoping to either buy some land outright and then build OR buy a house with acreage. We want at least 5 acres, but really more like 10-15. We thought if we wanted a house with acreage, we could do either the USDA loan or FHA if we have the down payment. But then I just read on another board that FHA and USDA have limits to the acreage you can finance? Can someone explain this to me? We'll have to rethink things if this is the case. What about a USDA or FHA loan to build a house if we buy the property first? Would that work? I'd love any help. Thanks!
08-08-2011 07:17 AM
You may want to look up the specifics of the FHA 203(i) loan program... It assists with the purchase of rural type farm house with 2 or more acres. Same requirements as any other FHA loan.
08-08-2011 08:26 AM
Also, does anyone have a good idea of what the acreage limit might be with USDA in a rural area? I've read some stuff saying it needs to be around average for an area, but how do they calculate that in a rural area with farms/woods/etc? Seems like the average could be high?
08-08-2011 04:55 PM
I'm almost sure you would have to have a house that is at least liveable that would pass an appraiser for FHA & USDA as they are government backed loans to support first time homebuyers. To buy land you would need a conventional loan would be my best guess.
08-09-2011 02:16 AM
No, USDA Rural Development will NOT finance a loan for a property up to 5 acres. USDA's Farm program may, but I have no information on that.
We're in the middle of a USDA Rural Development Direct loan. We hope to close sometime soon. When we were looking at properties, there were many many that we came across that had too much acreage. The rule for Direct is that the acreage cannot be so large that the property can be subdivided. And THAT is specific to the County, Town and in some cases, even the property itself.
We were told to keep things to approx 1-2 acres...not exactly an easy feat in rural NY where everybody has more than 1-2 acres. We settled on a property with, we were told, 3 acres. Turns out it's actually 2.4 acres. No matter...we were required by USDA to have a written notice from the county assessor that the property could not be subdivided.
Whether or not a property can be subdivided depends on a lot of factors...road frontage, presence of wetlands, etc.
For what it's worth...this limitation does not apply to USDA Guaranteed. Guaranteed is a much easier way to go. But not as good of a rate for those that qualify for subsidized.
08-09-2011 02:18 AM
Also, you CAN build with USDA...but I wouldn't recommend it. They're ridiculous with what they require. We've been under contract since April 9th and still haven't closed. And our house is already built.
Finally, USDA is NOT for first time homebuyers. We actually currently own a home in another state. It's for folks that do not own a home, or are selling a home they already own. Our situation is specifically unique but no, it is not for first time buyers.