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    Home » USDA No Money Down Renovation Loan Financing

    Zero Down USDA Renovation and Repair Loan

    Borrowers can now combine the benefits of the FHA 203k Renovation Loan with the cost savings of a USDA Loan using the new USDA Renovation Loan. USDA eligible borrowers can obtain one loan, to purchase a house and include a repair escrow budget to finance renovation and rehab projects (including major structural repairs), after the loan closes.

    Zero Down USDA Renovation and Repair Loan

    Benefits of the USDA Renovation and Repair Loan:

    • The USDA Renovation Loan program allows USDA eligible borrowers the benefit of creating one loan amount, including a repair escrow budget to finance renovation and rehab projects (including major structural repairs), that will be combined with the purchase price of the house
    • Repairs are made after settlement, so there will be no delays on a transaction closing due to appraisal mandated repairs
    • Homebuyers can update and customize a house to their personal requirements
    • Greater appraised value, as the USDA Appraiser will determine the property value based on the “as-improved” Vs. the current “as-is value”
    • Lower Monthly Mortgage Insurance or PMI, compared to a comparable FHA 203k Renovation Loan

    Eligible Repairs:

    • Removing safety and health hazards
    • Making the dwelling accessible to persons with disabilities
    • Repair or installation of septic system and water wells
    • Additions or structural alterations
    • Modernization (kitchens and bathrooms, interior floor cover, exterior siding, etc.)
    • Installation of energy conservation or weatherization feature
    • Repairs to existing swimming pools, hot tubs, or saunas

    Process and Planning:

    • Preliminary Approval. Determine how much you can qualify for under the USDA Renovation Loan Program. This will require that you make a loan application and provide income and assets documents. This program requires a minimum credit score is 580 for all borrowers on the loan and an approval level of Accept/Eligible, Refer, and Refer with Caution.
    • Find a house you want purchase and provide an estimate for the cost of repairs needed to the property
    • Upon having your offer accepted by the Seller, provide a full General Contractor invoice detailing the repairs and renovation work being performed
    • Loan package will be provided that includes the combined purchase price of the house and cost of the repairs
    • Upon loan approval you will close on the transaction. When you close on the house you will acquire the property, a repair escrow account will be set aside to fund the repairs and renovation, and the General Contractor can start work on the house
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