My property is no longer in a USDA Eligible Area... can I refinance with a new USDA mortgage?

My property is no longer in a USDA zone... can I still refinance with a USDA mortgage?  

I had this question from a caller the other day and it was a good question.  They had read my recent post about USDA Refinancing and wondered if they would still be eligible for USDA financing since there had been a lot of development around them since they bought the house years ago. They checked the USDA eligibilty map and their property was no longer in a USDA eligible zone.


Could they still refinance their existing USDA mortgage with a USDA mortgage with a lower rate?


The Answer  :   Yes


The USDA changes it eligibility maps from time to time based on population growth and development.  Often as metro areas expand and suburbs creep further and further out, farm fields and undeveloped land give way to subdivisions with new construction.  Suburban sprawl often changes the definition of a rural area, too. 

  As time goes on and population centers shift sometimes these once rural   properties are no longer quite so rural.  When the USDA does update their property eligibility maps often these properties are no longer eligible for a USDA purchase.   Those that have purchased their property using USDA financing are eligible to refinance this same property using a USDA refinance, even if they are no longer in a USDA eligible zone.  Essentially, once you have a USDA mortgage on your home, you are "grandfathered in" and are able to refinance using USDA financing again.  Even if your home is suddenly part of a busy metro area.  If you did sell your house, any new buyer would not be able to use USDA financing.  USDA refinances are only for refinancing of an existing USDA loan.