Differences between FHA, VA, USDA, and Conventional Loans for Private Road Properties
Differences between FHA, VA, USDA, and Conventional Loans for Private Road Properties
You found the perfect home, but the property is located on a private road. How do loans for private road properties differ between mortgage programs? How can a property located on a private road affect your loan approval?
When a property is located on a private road, there are important steps that need to be taken to help secure financing. However, there are also differences between private road requirements for each loan program – FHA, VA, USDA, and Conventional.
Be sure to download our FREE Comparison Chart that compares FHA, VA, USDA, and Conventional loans in one convenient side-by-side chart.
Private Road Financing 1-2-3
No matter the loan type, it is always good practice to follow the below steps when the property you are interested in purchasing is located on a private road:
- Call your local county roads & bridges department to confirm the type of road classification your property sits on.
- If it is a private road, ensure that the lender, bank, or broker handling the mortgage is experienced with private roads and can easily and properly determine what loan program is available for you.
- If required, be sure to follow up with the closing attorney or title company handling the transaction to determine:
- Are there recorded easements?
- Is there a recorded maintenance agreement? (See below on whether this will be a requirement based on the loan program.)
The MAJOR distinction between a private and public road is that a private road is maintained at the expense of the property owner and not the public. Do not assume that because a road is dirt or unpaved that it is a private road since there can be a variety of classifications for road types, so be sure to double check and follow step 1 above.
Special Requirements by Loan Type:
Once you have completed steps 1 through 3, it is important to note the requirements of each loan type.
- Conventional Loans: Fannie Mae will require a private road maintenance agreement, but Freddie Mac guidelines do not. Check with your lender if they can work with Freddie Mac programs.
- VA Loans: Requires a recorded maintenance agreement but this can be waived with VA approval.
- FHA Loans: Do NOT require a private road maintenance agreement.
- USDA Loans: Do NOT require a private road maintenance agreement
Note: Additional criteria will apply for private roads under both FHA and USDA loans such as the requirement to be protected by permanently recorded easements.
Whether you are looking at a USDA loan, FHA loan, VA home loan, or a Conventional loan, be sure to call our office to discuss your individual scenario.
As a USDA Approved Lender in Florida, Tennessee, Alabama, and Texas, let our experience and expertise go to work for you!
Just call or email to discuss your scenario and let us show you the “Metroplex” difference!
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