Rural Development Update

Grand Rapids Real Estate Scot Veneklase is a Mortgage Specialist with Exchange Financial and one of my trusted, go to lenders. If you are looking to finance a home or condo, refinance an existing mortgage or need help analyzing your credit, make sure to give Scot a call.

Rural Development Update

Rural Development is a great program and we are closing many of these loans. RD has recently taken on more restrictive rules with regards to what they consider to be a farm and farm service buildings (see below for their definition). Bottom line is that if RD determines that any part of the land is income producing or has farm service buildings on the property they will issue a property rejection. They have said that a standard pole barn used for residential storage is acceptable. Let me know if I can be of any assistance.

Farm Service Buildings

The regulation at 7 C.F.R. section 1980.313(a) states: “The property on which the loan is made must be located in a designated rural area ……A nonfarm tract to be purchased or improved with loan funds must not be closely associated with farm service buildings.”

The Agency considers a farm to be 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. The Agency considers a farm service building to be any of the structures used in farming operations, which may include buildings to house workers and their families, or livestock, machinery and crops. Service buildings can include, but are not limited to, livestock barns and shelters; machinery-and form supply-storage buildings; 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 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.

Properties that are actively used as a farm operation, or in cases where the seller previously used the property to operate a farm, are ineligible for the SFHGLP. The same apply for properties that contain farm service building(s), even if the building(s) have no contributory value.


Scot W. Veneklase, Sr. Loan Officer
Exchange Financial Mortgage
616-957-3480-Office Ext 108
616-293-7040-Cell (Available Monday-Sunday, 7a.m. to 8p.m.)

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