A Modest House

While cost and features vary in different areas of the country, the home and site must be modest. A modest home generally has between 400 and 2,000 square feet living area, above grade. A modest site generally cannot be subdivided under local zoning laws, does not include land or structures that will be used principally for income-producing purposes, complies with local zoning requirements, and does not have an in-ground swimming pool (unless the seller agrees to remove/fill it before closing). Under certain conditions, an exception to these standards may be granted on a case by case basis. The value of a dwelling may not exceed the area loan limit for the area in which the applicant is requesting financing.

Recent changes to the handbook 3550-1, removed the maximum square footage of 2,000 sqft. However the home purchase price still has to be lower than the Area Loan Limit.