USDA Construction Loan: You can build a home on your own lot with a USDA loan!
In today’s video I am going to walk you through the steps of obtaining a USDA construction loan, and how it can be possible to build a home on your own lot with no down payment.
However, if you have a qualifying question or a loan approval that is experiencing trouble, remember that I started the company way back in 2001, so let our experience be a resource for you and take advantage of our Free Second Opinion Service (“SOS”) which can be a great way to help keep your mortgage approval headed in the right direction!
Can you build on your own lot with a USDA construction loan?
As a starting point, USDA loans allow for no-down payment and that also applies to their single-close construction to permanent option which is described as the following:
“A single-close loan combines the features of a construction loan, which is a short-term interim loan for financing the cost of construction, and the traditional long-term permanent residential mortgage.”
With that being said, many don’t realize that the USDA Single-Close Construction loan can be used to build a home on land that you already own!
USDA construction loan proceeds can be used to:
- Remove an existing manufactured home;
- Pay off an existing manufactured home or land loan;
- Build a new Single Family, Modular, or Manufactured home on your own lot
So, for those who already have land and do not want to move, a USDA construction loan will allow you the flexibility to build on your own lot without a down payment and save you that extra step of having to find and pay for another piece of land.
Key points to remember:
- Since there is only one closing, this can save significant costs.
- Sufficient equity will be required which will be determined by an appraisal.
- While there is no down payment, closing costs do still apply, but if the appraised value exceeds your loan amount, USDA guidelines will allow you to increase your loan in order to “roll-in” those costs.
- Minimum credit conditions will apply, but USDA loans offer credit flexibility.
- Unless we have already given a specific Builder or Dealer eligibility, their approval will be required prior to start of construction.
Remember, as a USDA Approved Lender, we are here as a resource to help walk you through the steps on how to build a home with a USDA No Down Payment construction to permanent loan.
Just call or email to discuss to discuss your scenario and let us show you the “Metroplex” difference!
800-806-9836 Ext. 280
As always, I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!