USDA Refinance Requirements – When is the Appraisal Report Required

When refinancing an existing USDA Rural Development Loan there are situations in which a new appraisal report is mandatory. The primary situation in which an appraisal report will be required is when the current loan is through the USDA Direct Rural Development Program. The requirement to obtain the appraisal report when the existing loan is through the Direct Rural Development Program is based on the following:

	The appraisal report will be required by Rural Development Centralized Servicing Center to determine the Subsidy Recapture balance
	The only USDA refinance program available to USDA Direct Rural Development borrowers is the USDA non-StreamlineRefinance Program, which requires an appraisal report

Other situations in which an appraisal report will be required include:

	The interest rate on the new loan will be less than a 1% reduction to the borrower
	The borrower wants to include closing costs, escrows, and per-day interest into the new loan (and isn’t in one of the 19 states eligible for the USDA Pilot Program)
	If the existing USDA Loan is less than 12 months from the last purchase or refinance transaction date