Is there a way around the USDA home loan land/home ratio requirements?

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Our prospective farm (house + acreage) was appraised at the land 45%, the home 55% of the appraised value. Apparently USDA has a strict 30% max land value to 70% home value requirement. The appraisal was off in my opinion but our mortgage bank can’t pick USDA’s appraisors for this loan.

Any thoughts on whether, the seller (who is a friend of ours desperate to sell) can only sell us 10 acres and “retain the rest himself” thereby only “officially selling us a portion of the land improving the ratio. I’m considering working that angle with the seller and a new lender… Any input, suggestions, experience with this would be greatly appreciated. Thanks.

  1. Reply
    January 30, 2011 at 9:31 pm

    Subdivision of acreage is a big undertaking, which could (if it’s even possible) take months or years, and costs lots of money. Generally, land can be subdivided into multiple 40 acre parcels without a lot of work, in most states, depending on your zoning.

    You could try an FHA home loan, which ignores all but 2 A of the land. The rest is considered to be no value. For example:
    Suppose you owned this:
    100 Acres, 2000 ft2 house = $ 1,000,000 value
    FHA would appraise a home loan, which would probably be about this:
    2A, 2000 ft2 house = $ 500,000
    To get an FHA loan, but still have $ 1M in value, if you COULD subdivide into 40 Acre parcels without going through a whole subdivision process, you would have to hope for this result in your appraisal:
    40A, 2000 ft2 house = $ 500,000 (38A ignored) – new registered lot
    60A, no house = $ 500,000 to be sold seperately – rest of current farm

  2. Reply
    Kasandra Megan
    January 30, 2011 at 9:34 pm

    Hello,I am Mrs Kasandra Megan from Kentucky US,I saw your question and decide to refer to Mr Godwin James who is the managing director of Season financial Company,he gave me loan of $ 45,000 with an interest rate of 4% 2days ago.It was fast and easy, you can contact him personally via email just let him know i refer you if you are willing to pay back the loan. Thank you

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