Farms and properties with farm service buildings are ineligible for the USDA Rural Housing loan program. This is a clarification that was just issued this past week by our major investor.
This clarification is based on RD Administrative Notice 4590
: Properties that are actively used as a farm operation – or if the seller previously used the property to operate a farm – are ineligible. Farm service buildings are also not eligible, even if the buildings have no contributory value.
Farm: A parcel or parcels of land operated for the production of one or more agricultural commodities and which customarily produces (or is capable of producing) such commodities for sale
Farm service building (outbuildings): Any structure used in farming operations, which may include buildings to house workers and their families, livestock, machinery and/or crops. Farm service buildings may include (but are not limited to): livestock barns and shelters; storage buildings for machinery and farm supply items; buildings and facilities for crop storage, including fodder; and special-purpose structures such as grain silos.
- The nature and arrangements of farm facilities vary significantly. Older buildings may be built with lumber, while modern buildings are typically steel. Farm service buildings are typically associated with a tract of land cultivated the for the purpose of agricultural production or devoted to raising and breeding domestic animals, such as cattle. They can also be associated with other types of farm operations involving water, such as oyster, catfish or trout farms.
- The presence of a farm service building on an adjoining property which is not part of the parcel or lot being purchased does not disqualify a property. If a farm service building is located on the lot or parcel being purchased, however, then the property is not eligible regardless of the farm service building’s value.