Wednesday, December 25, 2013

Kentucky Rural Housing USDA Guidelines for Outbuildings, Barns, Storage Sheds, Farm Animals, Farm Machinery and land values

USDA Outbuildings & Property Eligibility Rules

If you are listing a home that you think might qualify for USDA financing, Rural Housing will not let you finance a property with income-producing outbuildings or excessive land values. 

Here’s some information to determine if the property qualifies for a USDA mortgage.

The property is ineligible if any of the building can be used for farm-related purposes, even if it’s not being used as such at this time. 

  • No farm-related property
  • No vacant land primarily used for farming, or commercial business
  • No farm-related outbuildings
    • Livestock barns/shelters
    • Machinery storage buildings
    • Crop storage buildings
    • Grain silos

Functional farm structures are acceptable if they are non-income producing, acceptable for the area, and the value is deducted from the appraisal value for loan purposes. 

  • Barns
  • Horse, calf, goats, small animals as pets
  • Usable structure value must be deducted from appraisal value
    • Property Value $100,000 – Less $10,000 Barn Value = $90,000 Maximum Loan Value (can add up-front guarantee fee)

Non-functional Farm structures that cannot be used without significant repairs are acceptable for USDA lending purposes.

  • Dilapidated barns or storage sheds used for storage (non-farm items)

Land Limitations

  • “Generally,” the value of the site must not exceed 30% of total value of property
  • State offices cannot impose acreage limitations (such as 10 acres, etc.).

Questions to consider when qualifying site & outbuildings

  1. Is there income-producing land?
  2. Are there buildings that CAN BE USED for income-producing purposes?
  3. Are there buildings SPECIFICALLY designed to accommodate business or income-producing enterprises? 
(If yes answer, property is NOT ELIGIBLE for USDA financing.)

"The information provided has been based on rules and regulations issued by Federal Agencies and interpreted for you by  Interpretations are not guaranteed but we attempt to make them both easy to understand and help you sell more real estate.  Check with your local and state authorities to ensure that you meet all requirements and disclosures."

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Provided to you courtesy of:

Name                Joel Lobb                                             Phone:502-905-3708
Title                  Loan Officer NMLS#57916                                 Fax:
City, State  Zip  Louisville KY 40223                               Website: