Build Your Dream Home with No Money Down
USDA One Time Close Construction Loan offers 100% financing, up to the “subject to” appraised value of the home. The rate is fixed up front and the loan fully funds at the time of closing. (New Construction ONLY, No Renovations)
New home construction loan features:
– One (1) closing
– Min. Down Payment= 0% (Finance 100% of the properties “subject to” value)
– Interest rate is locked at close
– 30 year fixed rate loan
– For primary residences only that are eligible per USDA Property Eligibility Site.
– Standard USDA loan limits apply and are calculated based on the property’s “subject to” value
– Borrower chooses contractor, subject to LH Lending verification
– Payment reserve established at closing to make payments on your behalf during construction phase
A 30 year fixed rate loan with 360 equal payments, at a 90% LTV loan, resulting in a 10% downpayment, and an annual percentage rate of 4.75% will have a monthly principal and interest payment of $1,043 per month. This payment does not include the amounts for taxes, property insurance, or mortgage insurance.
Government loans such as FHA, USDA and VA typically have more flexible guidelines than conventional loans but interest rates are typically higher. Not a commitment to lend. All loans subject to credit and property approval.
USDA Construction Loans for New Homes
Through the USDA’s combination construction-to-permanent loan, or single-close loan, homebuyers wishing to build a home with a USDA loan can do so. The single-close loan combines a construction loan, or interim financing, with a traditional 30-year fixed USDA loan.
The primary benefit to homebuyers with a single-close loan is that there is only one closing, saving the homebuyer a considerable amount in closing costs. Additionally, with a USDA single-close loan, the lender receives the loan note guarantee before construction begins, creating added confidence.
Choosing a Contractor
To ensure success, the USDA requires that the lender approve any builders or contractors you wish to use. In order for the contractor or builder to be eligible to build your home using the USDA loan they must:
– Have a minimum of 2 years of experience building single-family homes
– Furnish a construction or contractor license
– Provide evidence of a minimum of $500,000 in commercial liability – insurance
– Be free of open judgments and have a satisfactory credit history
– Pass a background check, proving no past felonies
If you have trouble finding a homebuilder who meets the above requirements, your lender may be able to help.
Eligible USDA Loan Costs for New Construction
With a USDA construction loan, your lender is responsible for managing the disbursement of the loan proceeds to the homebuilder or contractor for costs associated with the home.
Loan costs that are covered by the USDA single-close loan include:
– Costs detailed in the contract between the homebuilder and borrower
– Costs paid to subcontractors for work on the home, including items such as septic, driveways, utilities and landscaping
– Cost to acquire the land or pay off the balance of the land
Additional costs that may be paid for with your USDA construction loan also include items such as surveys, permits, appraisals, inspections, architectural design plans, plan reviews and lender construction administration fees.
Additional USDA Single-Close Loan Information
As with any USDA loan, the homebuyer must meet income and eligibility requirements and the property must be in a USDA approved location. However, there are some additional stipulations, which include:
– The home meets current IECC, or subsequent code, for thermal standards
– The homebuyer must receive a new construction warranty from the builder
– Any excess funds from the construction must go directly towards the loan – principle
– Funds may be used to construct a single-family home, manufactured home and eligible condominium
The USDA Construction Loan Process
Here’s how our home loan process works:
– Complete our simple USDA Construction Loan Qualifier
– Receive options based on your unique criteria and scenario
– Compare mortgage interest rates and terms
– Choose the mortgage loan offer that best fits your needs
– Let us connect you with an Elite Realtor to start the process towards building your perfect home