With a USDA Home loan , you have the option to finance in the cost of repairs and some appliances. This is only a possibility if the house appraises for more than the sales price. The sales price plus the cost of repairs/upgrades cannot exceed the appraised value. For example, if sales price is 100k and 2k for appliances, the home must appraise for at least 102k or more.
This program allows the repairs to be financed into your loan and taken care of post closing by a professional contractor. Unfortunately, you are not able to complete these repairs yourself. These are usually minor repairs that must be noted by the appraiser in the appraisal report. The repairs can consist of minor items, such as; replacing carpet, painting, fixing broken windows, fixing non-working toilets, etc. You will need to obtain an actual bid from a professional contractor to show the estimated cost to fix the repair items the appraiser is requiring for the property to meet minimum guidelines. The bid needs to have your name, list items to be fixed, cost of items, on contractor letterhead, contractor name and mailing address. The cost shown in the contractor’s bid will be financed into the loan and held in escrow. The contractor will receive 50% of their estimated bid at closing and the remaining amount after the work is completed. To determine the work has been completed, we will send the appraiser back out to the property to complete a final inspection and take photos . Upon our receipt of the final inspection, the contractor is released the rest of their funds by regular mail.
The only allowed upgrades are for the following appliances: refrigerator, stove/range, microwave, and dishwasher. You will need to obtain a quote from the store you wish to purchase the appliances from. The quote must have your name, the subject property address, list items being purchased, cost for items, and reflect company name. The amount shown on the quote will be financed into the loan amount. You will receive a check at closing made payable to the appliance store. You can take the check into the store and purchase your appliances. Once the appliances are delivered, you will need to obtain a copy of the delivery confirmation showing the appliances have been delivered to the subject property address. Finally, you will submit a copy of the paid receipt and delivery confirmation to us to complete the requirements for the loan.