Jennifer is applying for a USDA Rural Development loan to purchase a home in a small New Hampshire town. The property has a private well. The USDA loan underwriter requires a water quality test before approving the loan. Jennifer's agent tells her this requirement is unnecessary because the seller disclosed no known issues with the well. Which statement best evaluates the agent's advice?
Correct Answer
D) The agent is incorrect; USDA loans require water potability testing for properties with private wells regardless of seller disclosure
USDA Rural Development loan guidelines require water potability testing for properties served by private wells, regardless of what the seller has disclosed. The seller's disclosure that there are no known issues does not substitute for an actual water quality test required by the loan program. In New Hampshire, where a significant percentage of rural properties rely on private wells, agents must understand that federal loan program requirements (USDA, FHA, VA) often mandate independent testing.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
The debt-to-income ratio (DTI) compares a borrower's monthly debt obligations to their gross monthly income. It is used by lenders to determine how much mortgage a borrower can afford.
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