A USDA mortgage, also known as a USDA Rural Development Loan, is a type of mortgage loan program offered by the United States Department of Agriculture (USDA). These loans are designed to help low- to moderate-income borrowers in rural areas purchase homes with favorable terms.

USDA LOAN is the only product that does not like borrowers to have multiple homes and they make it difficult to do so but not impossible.

For those folks who want to keep their existing home and rent it out or let family live in it. It is possible and I figured I would share what needs to happen in order for that to be allowed.

Borrowers can own a maximum of one home in addition to the subject property that they are purchasing.

To retain a home and buy a new one using a USDA LOAN ALL of the following must be met:

1. The borrowers cannot be financially responsible for another Agency guaranteed or direct home loan at time of closing. This means cannot have another USDA guaranteed loan. Other financing is ok.
2. Of course, you must be able to afford both homes. Unless they have two years rental history on the home they currently own they cannot use rental income. No rental income allowed on a departing residence. Reminder if the existing home is a rental that goes against household income.
3. Borrower will occupy the home as primary throughout the entire term of the loan. Not sure how they police this. All other agencies are 12 months.
4. THIS IS THE TOUGHY. The departing or current home owner must no longer meet the applicant’s needs. They give examples but not limited to.

1. Relocation due to a new job opportunity.
2. Need larger home for a growing family.
3. Getting divorced and ex will keep the existing home.
4. Is a non-occupant borrower on an existing home.

As an example, I just had one as I am writing this where they had a medical procedure and the old home had stairs and the new one does not. That is likely an acceptable reason to allow the second home.

Overall, USDA mortgages can be an excellent option for eligible borrowers seeking to purchase homes in rural areas with little or no down payment and competitive interest rates.