What is a USDA renovation loan?

A USDA rural home loan is a type of USDA mortgage that allows rural homeowners to get up to 100% financing — and several other benefits — on a new home!

Whether you’re looking to buy, build, repair, renovate, or even relocate a home, a USDA rural home loan from CrossCountry Mortgage can help you make your homeownership dreams come true.

A USDA renovation loan is a rehabilitation loan that can help you purchase a home that needs repair or modernization.

In addition to the cost of the home, the loan also covers the cost of qualified home repairs. Offered by the USDA, these renovation loans follow the same USDA home guidelines, such as allowing rural homeowners to get up to 100% financing on a new home!

A farmhouse renovated with a USDA renovation loan

What are the benefits of a USDA renovation loan?

Buying a house that needs rehabilitation can often be complicated and costly. Repairs can drain your savings or investments. Interim acquisition and improvement loans often have relatively high interest rates, short repayment terms, and a balloon payment.

A renovation loan can save you time and money by combining the purchase price, home repairs, and other desired renovations into a single fixed-rate mortgage.

With this type of loan, you may benefit from lower interest rates and costs associated with repairs and modernization than financing repairs through other methods like home equity lines of credit, credit cards, or personal loans.

The interest you pay on your mortgage may be tax deductible, and repairs aren’t stretched out over months or years. You can customize the home to meet your needs. Improvements may also increase home value and resale marketability; however, items considered “luxury” cannot be included. More parties and steps may be involved with USDA renovation loans, including appraisers, consultants, contractors, and inspectors. Additional costs may apply.

What are the different types of USDA renovation loans?

USDA offers two types of renovation loans: Limited and Full options. Both options allow the same great benefit of combining the purchase price, home repairs, and remodeling costs into one loan amount, but the extent of the repairs can vary depending on which option fits your needs the best.

Limited USDA Renovation Loans

The Limited USDA Renovation home loan lets you tap into funds quickly and easily to make less extensive repairs and improvements. No minimum repair costs are required. The maximum repair amount is $35,000.

A variety of repairs and upgrades can be financed with this program, including

  • Roof
  • Gutters
  • Downspouts
  • Existing HVAC systems
  • Plumbing and electrical systems
  • Flooring
  • Minor remodeling (not involving structural repairs)
  • Interior and exterior painting
  • Weatherization (insulation, storm doors, windows, and weather stripping)

Major or lengthy repairs and remodeling, like new construction or landscaping, are ineligible.

Full USDA Renovation Loans

The Full USDA Renovation has no minimum and no maximum on the renovation amount, however, loan amount limits follow the conforming loan limits set by the Federal Housing Finance Agency (FHFA).

Unlike the Limited USDA Renovation loan, the Full USDA Renovation loan requires a HUD consultant who inspects the property, consults on the repairs and the associated costs, manages the project, and provides a work write-up.

Full USDA Renovation repairs include all those eligible with the Limited USDA Renovation, as well as certain structural alterations and reconstruction, rehabilitation of garages, modernization of bathrooms and kitchens (including new appliances), removal of health and safety hazards, aesthetic appeal changes, installation of wells or septic systems, and handicapped accessibility improvements.

Major or lengthy repairs and remodeling, like new construction or landscaping, are ineligible.

Are you eligible or ineligible for a USDA renovation loan?

Eligible borrowers:

  • U.S. Citizens
  • Permanent resident aliens
  • Qualified non-profit organizations
  • Qualified non-permanent resident aliens
  • State and local government agencies

Ineligible borrowers:

  • Foreign nationals
  • Corporations or limited liability companies (LLC)

Eligible vs. Ineligible Properties


  • 1-unit single-family home residences and planned unit developments
  • Site condos
  • Modular homes


  • Cooperatives
  • 2 to 4-unit single-family residences
  • Manufactured homes
  • Properties with non-conforming construction that cannot be remedied
  • Leaseholds
  • Income-producing features
  • Converting structures to SFH dwellings (barns, schoolhouses, etc.)

What are the requirements for USDA renovation loans?

The owner must occupy the home. No second homes or investment properties. The transaction must be a purchase loan only. Loans are subject to specific appraisal and renovation requirements.

Eligible major structural home repairs include:

  • Structural alterations
  • Chimneys and skylights
  • Additional bathroom installation
  • Attic and basement finishing
  • Termite damage repair
  • Existing detached garage repair
  • New, attached garages
  • Bathroom and kitchen modernization
  • Health and safety hazard removal
  • HVAC repair or replacement
  • Electrical and plumbing systems
  • Major landscaping improvements
  • Grading and drainage improvements
  • Swimming pool repairs (Greater than, or equal to, $1,500)

Eligible non-structural home repairs include:

  • Roofs, gutters, and downspouts
  • Existing HVAC systems
  • Plumbing and electrical systems
  • Flooring and carpeting
  • Interior and exterior paint
  • Appliances (purchase and installation)
  • Accessibility improvements
  • Exterior decks, patios, and porches
  • Basement finishing (non-structural)
  • Basement waterproofing
  • Weatherization upgrades
  • Window and door replacements
  • Wall residing
  • Septic and well systems

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