USDA Loans and Swimming Pools
Date: May 1, 2011For years properties that included an in-ground swimming pool were deemed ineligible for a USDA Rural Development Loan. This guideline has recently been loosened to include properties with an in-ground pool provided that the USDA Loan isn't used to finance the portion of the property's value attributed to the pool.
For properties that include an in-ground pool the appraiser must determine the value of the property with and without a pool. The appraiser must justify their determinations of value. This may include the use of additional comparable homes of similar size but without a pool. Essentially the appraiser is providing the value of the home as-is with the pool and a value of the home based on the assumption that it didn't have a swimming pool.
If the purchase price of the house exceeds the value of the property without the swimming pool the difference must be paid for by the buyer. For example reference these two scenarios.
Scenario 1:
 | Sales price: $200,000 |
| Property value including pool: $205,000 |
| Property value excluding pool: $195,000 |
| Value added of the pool by appraiser: $10,000 |
| Maximum base loan amount: $195,000 |
| Down payment required by borrower at settlement: $5,000 |
Scenario 2:
| Sales price: $200,000 |
| Property value including pool: $205,000 |
| Property value excluding pool: $203,000 |
| Value added of the pool by appraiser: $2,000 |
| Maximum base loan amount: $203,000 (which is the greater of the purchase price or property value excluding pool) |
| Down payment required by borrower at settlement: $0 |
Pragmatically in many areas of United State having an in-ground swimming pool only adds a very limited value to the property so purchasing a property with a pool should not be a problem when using a USDA Loan. For properties in The Sun States, such as Florida, Arizona, California, where swimming pools are more common, Buyers Agent should review comparable sales of similar houses without an in-ground swimming pool to ensure that purchase price of the house their Client is making an offer on can be supported by the appraisal report based on these guidelines.
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