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Buying a Home With Acreage
Many people like to purchase homes with acreage so they are not close to neighbors. Some homeowners have over 20 acres and are having difficulty getting financing on first or second-mortgage loans. Working on a case now where my client has a home on 81 acres, and there is not a single non-QM wholesale lender that will touch this property due to the large acreage the home sits on. The Veterans Affairs Administration will allow VA loans on large acreage if the property is not a working farm. In this thread, I like to go over financing a home that sits on acreage, what a working farm is, what the definition of a hobby farm is, and the loan options homeowners who want to buy or refinance on a home with acreage have. Luckily, I have a super cool client who is working with me on getting these obstacles answered. I have not yet encountered a single wholesale lender who will finance a first or second mortgage on homes larger than 10 acres.
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17 Replies
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I checked out LOS and we have 12 lenders that say they do Hobby Farms.
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Who are they? Are there second mortgage lenders that can do a second mortgage on 80 acres? All the non-qm lenders I spoke with does absolutely nothing to do with more than 10 acres.
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What if you sell hay from your property. Is it considered a working farm?
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Hey Gus,
Working farms – <b style=”font-family: inherit; font-size: inherit; color: var(–bb-body-text-color);”>A farm whose agricultural land and buildings are in active use for crop production and/or the raising of livestock.
Hobby Farms – Hobby farms are typically <b style=”font-family: inherit; font-size: inherit; color: var(–bb-body-text-color);”>small farms where the homeowner engages in farming activity for personal use. In this case the primary use of the property is residential and the secondary use is for insignificant farming activity.
Though theLender will not do these types of mortgage on our Non-QM side & Also will not do more than 10 Acres. ( exceptions may approve higher, but no more than 20 )
Side note:
Our matrix does not say ” Hobby Farms are ineligible ” but i will have to confirm. since its more personal use.
im thinking ( chicken coops in backyard, personal use only crops )
theLender will allow Agriculturally zoned properties on a case by case basis.
We can allow purchases on SFR’s with NON Working farms on our NON-QM, VA, USDA & DSCR, but you would need the properties to be minimal acreage with some thoughts to keep in mind.
No cows mooing LOL
No functioning farming businesses
Maybe there is an old barn- but its converted to another unit or ADU or even consider it as storage.
is there a crop field ? was there a crop field & now its no longer there?
What were the previous owners using those ( Farm like ) features for prior?
What does the borrower purchasing the property want from it?
Also, The now standing buildings ( barns, large storage buildings, etc. ) are they in a good enough condition where if the lender were to have to repurchase the loan- they would be able to sell it?
This would be the biggest reason – most NON-QM lenders need to be able fund on properties in a good enough conditon ( C4 or lower ) + be able to quickly sell it to be able to not be at a loss if the borrower were to default & would rather leave it to GOV type loans or programs to fill that gap in the industry.
VA & USDA – both do not have caps on Acreage.
USDA FSA would be your best bet for working farm scenarios. Or possibly a Private Money capital who specializes in Land.
Quick thought- maybe subdividing the main property into a smaller acreage & purchasing the remaining land with the working farm Seperately would be a good option.
To buy the land, you might want to consider FSA Loans such as the Down Payment Loan and farm ownership loans. Lease Land. Renting land may be a better option … ( theLender does not provide this program )
Please let me know if you have any other questions!
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What is you cut your field and sell hay.
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Thanks for your reply my man. I appreciate you as well as our whole team. Bottom line is currently has a VA loan on 81 acres. Ww got an approve/eligible with a $1,000,000 cash out at 7%. Borrowers current rate is 3.0% on $713,000 VA loan. Doing a cash our to pay outstanding debts. Perfect credit no late payments in the past 5 years. Of course any loan officer would love to do a million dollar cashout refinance. However, I don’t think it’s ti the best interest to my Borrowers not to explore keeping the first and pricing our a second mortgage to piggyback the first up to a 70% CLYV. W2 Wage earner. Makes all the sense in the world despite there is no common sense in the mortgage business. Talk to Sir Rudy and see if you guys are interested in making this happen. Thanks Cameron LeClair
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We do Piggy Backs with this product all day long… But cannot pass the CLTV MAX…
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Cameron, see if you guys can make an exception on second mortgage acreage loan.
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will do!
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Thanks you my MAN, CAM.
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Angie is going to send you a file now
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Cameron, need non-qm Lender with the following: LATE PAYMENTS PAST 12 MONTHS, MANUAL UNDERWRITING, NON-QM LOANS ONE DAY AFTER BANKRUPTCY, NO- doc loans, non-qm Jumbos, 90% LTV NON-QM Jumbo, ITIN, 1099s, nonwarrantable condos, New construction, 203k loans Manuel, W2 income only mortgages, fix and foux, bridge loans
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All Non-Qm is manual UW- max DTI 50%
<div>Fico Min- 600 ( max ltv 70% )</div><div>
</div><div><div>Late payments past 12 months- YES</div>NO SEASONING BK – NO NEED 12 Mo/ seasoning.
No Doc Loans- theNONI DSCR & Bridge – Also Asset Depletion. All can be used for investment & asset depletion does allow Primary, Secondary as well.
Non Qm jumbos – Yes up to $4 Milliom (Exception for over )
90% LTV NON-QM Jumbo- Yes up to $2 million 90% on purchases.
ITIN- Coming aoon
1099’s – Yes
Non warrantables – Yes
203k – No
Full doc non-qm * W2 only – Yes need 1 yr tax returns.
P&L unaudited – Yes no returns needed
Bridge loans – yes
Fix and flip – coming soon
Heloans- Yes
Bank Statements – Yes no returns needed
100% FHA – yes – 550+ fico 580+ manual uw
HELOC- coming soon
blankets- coming soon
Let me know what else you need !
Thanks!
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