USDA Loans: How to buy a buy a home that needs repair

You can buy a home that needs some repairs with the USDA loan program but there are some rules we need to know about. The USDA is not the program to use if the home needs major repairs. The USDA caps the total repair amount at 10% of the sales price. The USDA will also not allow the repairs to be used for any structural issues. This means the repairs can not be used for any repairs needed to the foundation or load bearing walls. The USDA also does not allow the repair funds to be used for any issues related to plumbing or electrical work. Any repairs needed will need to be completed by a licensed contractor.

The best use of the USDA repair program is for minor dings that the USDA appraiser would flag any home for.

USDA Loan Eligible Repairs

1) repair or replace the roof

2) repair interior or exterior paint issues on homes older than 1978 (due to possible lead in the paint)

3) replace cracked windows, broken windows, or windows that are sealed shut

4) repair unheated rooms

5) repair or replace the roof

6) install Ground Fault Interrupter outlets in any outlet with 6 feet of a water source