Question: I'm a broker and have borrowers who wish to get a $600,000 "stated income" loan for a property zoned for exclusive farm use only. The borrowers' credit score is 726 and our LTV is 60 percent. When construction on the new home is finished the property should be worth well over $1.5 million. Also, there are no plans to farm this land. Why can't we get a loan?

Answer: The property is reserved for farming, that is not the intended use, and so an agricultural loan is out. The proposed loan is above the conforming loan limit for a single-family house (60 percent of $600,000 = $360,000. The current single-family conforming loan limit in the continental U.S. is $333,700). Lastly, many loan programs will not accept a borrower's "stated income" -- instead the lender wants the actual amount verified.

Question: My son has decided to quit his job, sell his house in St. Louis and relocate to San Diego. He bought his current house in St. Louis in September 2003 and had made many improvements, mainly through his own hard work. The house appraised for $40,000 more than his purchase price. What can be done about taxes since he has been in the house less than two years?

Answer: In the usual case you must own a home for two years to qualify for the federal capital gains write off of up to $250,000 for an individual owner and $500,000 for a couple. However, there are exceptions.

One exception concerns employment: Basically, if you move 50 miles or more to a new job you may be able to take a portion of the write-off, depending on how long you occupied the home. For details, speak with a tax professional.

In addition, ask about the settlement expenses from when the home was bought, receipts for major improvements, and costs to sell. There may be a higher cost basis and thus less of a profit because of such items.

Questions: I'm considering a home that's in foreclosure. It's in a recently-built neighborhood where quite a few of the homes were originally purchased under allegedly fraudulent circumstances. Naturally, it's a great deal, and in an area I would never be able to afford except for the reduced price.

The home is being sold "as-is," Will I be able to make an offer that I can back out if the inspection reveals "unusual" structural damage that requires thousands of dollars to repair?

Answer: It doesn't matter what the seller will or will not allow. It only matters that you require a home inspection "satisfactory" to you. If your needs cannot be met, move on.

The property may be perfectly fine, but to protect your interests you need the help of a broker and an attorney to sort through issues of title, value, warranties, inspections, etc.

Question: We are a military family and will be relocating to Texas. We have good credit (721) but only $1,000 in cash.

We would like to use our VA loan entitlement. Our income is $4,000 monthly, car payments $515, and credit card debt, about $900 monthly. However, we will receive a $30,000 retirement bonus from the military in August which we plan to use to pay off our credit card debt and $115 in monthly car payments, leaving $400 monthly debt.

Are we kidding ourselves, should we just rent? I don't want to waste another lender's time or embarrass ourselves thinking that someone would actually qualify us for a loan.

Answer: You have nothing to be embarrassed about. You did not and will not waste any lender's time.

The VA program allows qualified borrowers to buy a home with nothing down. However, you could face some closing costs depending on how the sale is structured. Your cash on hand gives too little room for moving, fixing up, possible closing expenses, etc.

The best approach would be to rent on a month-to-month basis once you're out of the military. Pay down credit card debt and never, ever build up so much credit debt again. Bulk up your savings. Have jobs so you can show income after retirement. Then sit down with a broker who can recommend a lender. In six months or so, with sufficient income and far less debt, you may be able to move into a new home.

Question: I am a volunteer attorney for a Senior Legal Hotline. I have a client who is being threatened with eviction from a mobile home park because he owns a 10-year old arthritic German Shepherd. The dog is always kept on a leash, is not a behavior problem, and is cleaned up after every time. The new regulations of the mobile home park prohibit dogs over 18" high.

California Mobile Home Residency Law allows tenants of mobile home parks one pet, subject to reasonable rules and regulations. We have other avenues of defense we can pursue, but I was curious about the reasonableness aspect of rental property pet regulations based only on the size of the pet -- particularly in a mobile home park.

Answer: Why 18 inches and not 17 inches? What if the dog slouches? Suppose a dog has ears that sometimes stick up and sometimes violate an invisible 18-inch plain -- is the dog okay or not? Is the 18-inch standard the product of any study or survey relating health and safety to pet size? Which ones? By whom? Suppose a 17-inch dog weighs 150 pounds and the shepherd weighs 100 -- why is height the only consideration?

The real defense here is that you have a new rule and an existing pet owner. The owner should be grandfathered in as long as the dog behaves and is properly attended.

Contact the local Humane Society for assistance. And thank you for your pro bono hours.

Question: An agreement was written in August, with an original closing date for September. There was supposed to be a check written for earnest money, but that was never done. The buyer faxed the agreement over to change the closing date to January. Can I get out of this agreement without having to pay money?

Answer: What agreement? Was not earnest money required upon acceptance of the offer as evidence of the buyer's good faith? Does the buyer have a unilateral right to continue closing to any future date?

Please have the documents reviewed by an attorney in your jurisdiction.

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This column is designed to provide accurate and authoritative information in regard to the subject matter covered. It is made available with the understanding that neither the author nor the publisher is engaged in rendering legal, accounting, or other professional services. If legal services or other expert assistance is required, the services of a competent professional person should be sought.

Published: April 9, 2004

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Have a real estate question for Realty Times? Wondering about buying, selling, financing, refinancing or renting? Here's where you can send your question to Peter G. Miller, OurBroker®, a nationally-known columnist, author and reporter. Peter G. Miller has written six books -- including The Common-Sense Mortgage -- a guide with hundreds of thousands of copies in print. Miller was the original creator and host of America Online's Real Estate Center and joined Realty Times in 1998. Send your questions to . Because of the volume of mail received, individual questions cannot be answered privately and not all questions can be used. Published letters may be edited for space and style and all letters become the property of Realty Times upon receipt.