Are there any retrictions to who I can sell to with a USDA loan?

Hi Chuck. Long answer here, but the restrictions come mainly on the buyer's side. As a true 100% financing loan program that is gov't assisted, the USDA Guaranteed Rural Housing Program does have a number of limitations. As a USDA lender, these are what I consider to be the main ones: 1) Eligible "rural" housing areas, 2) Income Limits on the borrower, 3) Funds availability for the program. The first thing to know is that the boundary lines for USDA eligible properties were set to change in October 2013 based on the census data. However, barring Congressional action, this change has officially been delayed until January 15, 2014. [The "Continuing Appropriations Act, 2014" (H.R. 2775)] Secondly, every area in the country has Houshold Income Limits the borrowers must fit within. Most of the times this doesn't affect buyers because they are well below the adjusted limits. Occassionally though, the gross income of the household by counting all of the income in the home, (whether they are borrowers on the loan or not), can push them over the income limits. USDA underwriters want to see the most conservative route for qualifying income, but yet want to see a generous calculation of the potential income the borrowers may earn. (Yes, they want their cake and eat it too on this.) Note: There is a difference between the Direct and Guaranteed Rural Housing Programs. Income limits are higher for the Guaranteed Program, and that is what we follow for our lending guidelines. Thirdly, funds availability... As an example, during the gov't shutdown, USDA issued memos indicating that they were uncertain when appropriations for funds would be available. This happens occassionally with this program. The good news is that we have since been notified that they expect funds to be available again Nov 1st. Now, since I see you are located in WA State... My last point may actually be the most important factor in your decision on who to sell to. While many other states have reasonable turn times for the final USDA approvals, WA State continues to have a very... VERY long turn time for the final approval to come back from the Olympia office. We as the lender must first originate and completely approve the file in underwriting... complete with appraisal and essentially be "ready for loan docs" before the file can even be sent to the USDA office for their final review. Then... it's just a waiting game. No rushes allowed, and we just wait. Recently, the timelines have been running 3 to 6 weeks for their final certifications. (PLEASE call your Congress Representatives on this!) Add that to the lender's standard underwriting turn times, and you easily have close to a two month closing period. (Our company's underwriting approvals and file flow can be completed in as little as two weeks or less to be ready for USDA submittal, but we still have to wait for the WA USDA office's final approval to fund the loan.) During this time, Lenders must protect the client's rate locks and also make sure the purchase agreements stay in contract. This can be a burden on a lot of people. The final approvals need to be in hand as well, prior to the boundary line changes in some areas that are affected by the eligible map changes. Understanding that many sellers (and even buyers) don't have the luxury or desire to wait this long, the USDA program may not be the best fit for the situation. Knowing this before getting under contract is of critical importance. If a longer closing timeline is acceptable to all parties, then outside of maybe a VA loan program, there really isn't a better 100% financing option out there for many buyers in USDA eligible areas. Here's the WA USDA Eligibility website: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do If you have further questions please don't hesitate to ask!

Hats off to Michael for a very detailed answer! If you have a USDA loan on your home already, there is also a consideration for you in selling IF you have a subsidized loan where the rate has been below market - only available if you obtained the loan directly from USDA rather than through an approved lender. If that is the case, call the local USDA office directly to make sure you understand what will happen when/if you sell.

If you have a USDA loan on your home, there are no restrictions on who you can sell the house to. Buyers? There are plenty of loan guidelines... but selling? Nope, sell to anyone without concern.