Property Requirements

The most critical requirement is that the property must be located in a USDA-designated rural area.

• Definition of Rural: "Rural" for USDA purposes often includes small towns, suburbs, and exurbs, not just farmland. Many areas just outside major metropolitan centers qualify.
• Eligibility Maps: The USDA provides official eligibility maps on their website where you can enter an address to see if it qualifies.
• Population Limits: Generally, eligible areas have a population of less than 35,000.

The loan is intended for modest, adequate housing and must be used as a primary residence.

• Allowed: Single-family homes, new construction, condominiums, and manufactured homes that meet specific guidelines are typically eligible.
• Not Allowed: The property cannot be income-producing, so duplexes or homes with a commercial aspect are generally not eligible.
• Acreage: There's no specific acreage limit, but the property's value should not be primarily in the land. The site size should be typical for the area.

The home must be safe, structurally sound, and have adequate utilities. An appraisal is required to verify this.

• Structural Soundness: Must have a solid foundation and be free of significant structural defects.
• Utilities: Must have access to water, electricity, and a functional septic system or public sewer.
• Safe Access: The property must have adequate and safe access from a public or private road.

The property must meet HUD's minimum property standards. If repairs are needed, they can sometimes be financed into the loan.

• Appraisal Inspection: An appraiser will inspect the property to ensure it meets minimum standards, checking the roof, HVAC system, plumbing, and electrical systems.
• Repair Escrows: If minor repairs are needed, funds can be held in an escrow account from the loan to be paid out once work is completed after closing.
• No "Fixer-Uppers": Homes requiring major structural repairs or renovations are typically not eligible for the standard USDA loan program.