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USDA Approval with Septic 'holding tank'?

I am currently looking to be a first time home buyer as I have finally found a home that meets all my needs!! My extreme excitement was short lived when I discovered due to the shape, size and placement of a road/the home, the previous owners were unable to place a septic system.  Instead the home has a 500 gallon holding tank.  I thought it was no big deal, with what I'm saving in costs with everything else I can pay to have it pumped out bi-monthly.  Then I discovered their is a good chance that I could possibly get denied for a USDA mortgage because of this holding tank.  The house itself is amazing, ALL of the plumbing, holding tank,  electrical, roof, siding, wrap around deck, interior walls are all 6 years old. The house was completely gutted, redone and flipped.  This house really is a dream come true for me, one downside is that it's a short-sale, but I am not in a rush, so that doesn't worry me.  But if I can't get approval through a USDA loan I can't get my dream home, I can't possibly afford 20% down for a conventional mortgage.  Houses like this is my area do not pop up quite often, as I have been looking for over four years.  It's got the perfect location, perfect size, perfect price((well...free is better, but it'll do ;p)) its just a perfect house for myself and my son. 

Any and all advice/help is greatly appreciated.  Like I stated, this is my first time in the housing market and I am basically 'flying by the seat of my pants'.

THANK YOU!!!!!!
  • September 04 2013 - US
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Answers (3)

 I would be concerned too. What state is the property located?
  • September 05 2013
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USDA appraisal have to follow FHA guidelines. There are two items I would check.  1. Is a public sewage connection readily available? If not then 2. Check with the local health department to make sure that type of system is approved for the county/town that the property is located.
  Hopefully the tank is not above ground and they are typical for that area.
  • September 05 2013
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You will not be able to finance this home using either a FHA, VA or USDA loan with a holding tank. Why? I have been down that road before and I know how the story ends. The USDA requires approved septic system installed or to be on sewer. Period.

 In order to sell the property, the seller just might have entertain putting in a septic system. You might have to increase the sales price in order to accommodate that prospect. Which you should be willing to do, after all you as the new buyer will have the most to benefit. Just a thought.


Best of Luck!
  • September 05 2013
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