Financing in Saint Joseph>Question Details

Etgruenke, Home Buyer in Saint Joseph, MN

Can you include costs to finish a basement in a Rural Development mortgage?

Asked by Etgruenke, Saint Joseph, MN Sun Jul 17, 2011

My husband and I are going with a Rural Development loan for our mortgage for our first home. We normally rule out houses without finished basements, but found one we really like with an unfinished basement. I've heard you can include money for repairs and appliances in a Rural Development loan, does this include money to finish a basement?

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From what i just read; probably not.

Why aren't you asking this question of the people who are giving you the USDA loan?

The basement is not included in the squarefootage as it is not a "Living" area.

From what i read you should be happy that you are getting this at all.

Google it, just like i did.

Good luck and may God bless
1 vote Thank Flag Link Sun Jul 17, 2011
USDA permits it, but yes it is definitely up to what the lender would allow as most lenders do not like to do any "post-closing" work, meaning administering the loan after it's funded/recorded, so your mileage will vary. USDA just sets the standard guidelines that lenders can't go any easier than, but lenders are free to make more restrictive overlay guidelines on top of them, like choosing not to finance any repairs.

Ask your lender if they permit it, they should be able to tell you right away or at least look into the guidelines and get back to you within an hour or two.
0 votes Thank Flag Link Tue Jul 19, 2011

So what you're saying is that I should be able to ask for 8k (7% of the home value) to replace old appliances and put in a new and much needed flooring upgrade?

OR is this not full USDA based and more based on what the lender allows?

We are currently waiting back on our home offer and I would like to know what I can do as the home needs a few things here and there and the lender we are going with does not offer 203k loans...
0 votes Thank Flag Link Tue Jul 19, 2011
Yes I have also read about people being able to finance repairs & appliances, usually up to a maximum of 10% of the financed loan amount, or $10k, whichever is less, and it is based on the "as improved" value. Looking at one of my lenders flyers, the types of repairs that can be included are "new roof, new well, new septic system, new appliances, new flooring, or updated plumbing or electrical systems". Finishing a basement seems excessive, and my guess is it wouldn't be permitted.
0 votes Thank Flag Link Sun Jul 17, 2011
What do you think about having Central Air installed?
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