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What costs can be included with a USDA No Down Payment Construction loan?

September 7th, 2018 by Sean Stephens

Can you purchase land separately with the USDA No Down Payment Construction loan?

Or, does it have to be through a builder?

In today’s video, I will explain how the purchase of land can be included with the USDA construction to permanent mortgage along with other eligible loan costs.

And if you have not yet done so, feel free to download our newest “USDA Construction Loan Blueprint for Success” with the link below.  This educational resource is designed to help walk you through the USDA qualifying process step-by-step and designed for both homebuyers and Realtors alike.

USDA New Construction Loans with No Down Payment

The USDA Single-Close Construction to Permanent loan allows a borrower to finance the construction of a new single family residence with No Down Payment with draws being provided to the builder after closing for the construction of the home.

Further, unlike other programs which only allow loan amounts based on the sales price, USDA Single-Close new construction guidelines Florida USDA New Construction Loanwill permit financing of loan related costs up to the appraised value of the property, with examples of those eligible costs being:

I. Land

  • Acquisition cost of the land.
    • Land may be purchased separately from a third party or directly through the builder contract
    • If land is purchased separately, the seller would receive their proceeds at closing as normal
  • Pay off the balance of land to be utilized in the construction of the dwelling.
    • If the land was previously purchased and has an existing loan, funds may be used to pay off the outstanding balance owed with the remaining loan proceeds used for construction costs

Highlands County Florida USDA Construction Loan for New HomesII. Construction Hard Costs

  • Costs inside the contract to be detailed on the construction budget agreed upon by the builder and borrower;
  • Costs outside of the contract, paid to subcontractors, for contributive work such as well and septic installation, roads/driveways, utility hookups, landscaping, etc.

III.  Construction Soft Costs

  • Contingency Reserve;
  • Interest Reserve;
  • Survey, Permits, Plan Review Fees, Title Updates, Project review fees, and more.

While this is not an all inclusive list of eligible costs, it does demonstrate the high amount of flexibility found under the USDA Single-Close New Construction to Permanent program, and while you are not able to purchase raw land on its own,  USDA construction loan financing allows for the purchase of land along with funding for the construction of a primary residence all with the convenience of one closing which occurs prior to the construction starting.

But, before we go, I just want to thank everyone for continuing to make us your USDA lender of choice and remember to just call or email to discuss your scenario and let us show you the “Metroplex” difference! 

 (800) 806-9836 X 280
SeanS@MPLX.org

 

P.S. – You can download our “USDA New Construction Guide” by CLICKING HERE

Florida USDA New Construction Loans with No Down Payment

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