Just Listed My House, Found Another for 203k on 15 Acres… Need Advice on Down Payment and Loan Options

Seeking Advice
1

I just listed my house at 165k and have a 100k mortgage left on it. I found a new property listed at 203k with 15 acres, and about 6 acres could be used for crops or rental. The new place has a 2-story home with 3 beds, 2 baths, and needs some roof and siding repairs.

I have 20k saved and am debating how to allocate funds. Should I put down some of my home equity or use that cash for repairs? Would using my own money for repairs give me any tax benefits? Also, I’m considering if a farm or USDA loan would work better than a regular mortgage for this property. Any advice on making the most of this move would be great!

2

Definitely get in touch with a lender ASAP—loan approval could be trickier with the crop acreage.

3

Asher said:
Definitely get in touch with a lender ASAP—loan approval could be trickier with the crop acreage.

Good call! Just to clarify, it’s 15 acres total, with 6 acres that could be used for crops or rental. There’s also a 2-story house with 3 beds, 2 baths, and an outbuilding.

4

@Ashwin
The lender’s concern would be any part of the property used for income. You’re allowed a hobby farm, but lenders may hesitate if it’s for rental income. You might want to avoid mentioning potential crop income in the contract.

5

@Ashwin
Good to know. Fannie Mae and Freddie Mac are strict about anything agricultural.

6

Asher said:
@Ashwin
Good to know. Fannie Mae and Freddie Mac are strict about anything agricultural.

If ag income isn’t counted for the loan, would it still be an issue?

7

Tavi said:

Asher said:
@Ashwin
Good to know. Fannie Mae and Freddie Mac are strict about anything agricultural.

If ag income isn’t counted for the loan, would it still be an issue?

Yes, any property with agricultural income is a red flag. Most mortgages go through Fannie Mae or Freddie Mac, and they avoid agricultural properties entirely. If there’s farm income, they won’t touch it.

8

Out of curiosity, where are you finding houses priced around 100k?

9

Zola said:
Out of curiosity, where are you finding houses priced around 100k?

Midwest.

10

Ashwin said:

Zola said:
Out of curiosity, where are you finding houses priced around 100k?

Midwest.

Where in the Midwest? I’m in that area too and would love to find similar prices.

11

@Broderick
Probably somewhere in Ohio.

12

Fielder said:
@Broderick
Probably somewhere in Ohio.

Got it, thanks!

13

Talk to a lender, and if you’re considering tax write-offs, maybe consult a tax advisor too. When you say 203k, are you talking about an FHA 203k rehab loan, or do you mean the price is $203,000? If it’s the FHA rehab loan, put down the minimum required by your debt ratio.

14

Just talked to a tax specialist in agriculture. Here’s what they mentioned:

  • Write-offs include depreciation on equipment (tractors, trailers, etc.) and certain livestock if they’re for breeding or dairy.

  • You can’t write off your primary residence.

Would definitely recommend talking to a CPA to confirm; tax stuff can get pretty technical.

15

Just be prepared if your home sale takes longer than expected. A delay there could set the whole plan back.

16

Curious—what do you plan to grow on the 6 acres? Considering equipment and fuel costs, would it actually be profitable?