What can be included with a USDA Single-Close Construction Loan in Florida, Texas, Tennessee, and Alabama?

What can be included with a USDA Single-Close Construction Loan in Florida, Texas, Tennessee, and Alabama?

Can you purchase land separately with a USDA Single-Close Construction, or does it have to done through a builder? In today’s video, I will explain what can be included with the No Down Payment USDA Single-Close Construction Loan and review the flexibility provided by this unique loan program.

However, don’t forget to download our FREE “USDA Blueprint for Success” with the link below. This is a great educational resource which walks you through the USDA qualifying process step-by-step and is designed for both homebuyers and Realtors alike.

What can be included with a USDA Single-Close Construction Loan in Florida, Texas, Tennessee, and Alabama?

With the USDA Single-Close Construction Loan, it allows for No Down Payment Financing and provides draws to the builder after closing in order to construct the home.

USDA Single-Close Construction Loan guidelines will also permit financing of loan related costs up to the appraised value of the property which differs from other programs which limit financing to the lesser of the appraised value or sales price. For example, let’s look at the following eligible costs:

Land: USDA Single-Close construction proceeds can be used towards the acquisition cost of the land, but remember the following:

• Land can 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 (prior to construction beginning)

Additionally, loan proceeds can be used to payoff the balance of land to be used in conjunction with the USDA Single-Close Construction Loan.

Also, if the land was purchased prior to obtaining the construction loan and has an existing balance, USDA construction loan funds can be used to pay off the outstanding balance owed as part of the process.

Construction Hard Costs: Construction hard costs are those costs contained within the building contract budget which are to be agreed upon by the builder and borrower.

These will also include costs outside of the contract, paid to subcontractors, for contributive work such as well and septic installation, roads/driveways, utility hookups, landscaping, etc.

Construction Soft Costs: USDA Single-Close Construction Loan soft costs include, but are not limited to, the following:

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

Summary:

In summary, while this is not an exhaustive list of eligible costs, it helps showcase the tremendous flexibility of the USDA Single-Close Construction Loan.  Additionally, even though you are unable to purchase vacant land by itself, the No Down Payment financing feature provides for an affordable way to purchase USDA land in conjunction with the construction of a primary residence.

Lastly, many thanks to everybody for choosing us your USDA lender of choice. 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

Thank you again for forwarding and sharing today’s topic with any friends, family, co-workers, or clients who are looking to purchase or build a home!

P.S. – Remember to CLICK HERE to download your Free USDA Blueprint for Success!