If you live in a rural area and are considering building your own home, it’s important to consider all your financing options. Conventional financing options typically require multiple loans for new construction homes. Many people take out separate loans for the construction process (also called interim construction loans) and the mortgage. This requires multiple closings, meaning that home buyers incur additional closing costs.
However, those living in rural areas have an additional option when it comes to construction loans. There is an alternative option available from the United States Department of Agriculture (USDA). The USDA is responsible for rural economic development and one of the tools they provide is the USDA Single Close Construction Loan. This can save you time and money, so read below to learn more!
In an effort to increase economic development in rural areas, the USDA created a One-Time Close (OTC) Loan. Borrowers often choose the USDA OTC Loan because it allows the borrower to take out a single loan that is going to cover financing for the lot, and the construction of the home. Some of the benefits of this loan are that it requires no money down, has a competitive interest rate, and requires only one closing. For this reason, the USDA Single Close Construction Loan is a popular option for construction projects.
A USDA Single Close Construction loan simplifies the financing process by combining two loans into one. Unlike Single Close Construction loans, traditional construction loans require borrowers to take out separate loans for construction and the financing. This process tends to drive up closing costs due to separate closing costs and increase timelines for the entire process.
A USDA OTC Loan includes all of the financing in a single closing. With a one loan closing package, a single promissory note, and one deed, this is ideal for people looking to build a construction project in rural areas.
For someone to be eligible for a US Department of Agriculture (USDA) loan, they must meet the following criteria:
Of note, the maximum amount allowed under this loan will vary based on income levels; however, these eligibility requirements are standard.
There are a few benefits that people should note regarding a USDA OTC Loan. Some of the key benefits are:
These are some of the key benefits of a USDA OTC loan. For those who live in rural areas, this is a great way to finance a new construction project.
A USDA OTC Loan is only one of the many options for those who are interested in building their own home. Some of the other options people might want to consider include:
If you would like to apply for a USDA Single Close loan, you need to complete a few important steps. The most ley steps in this process include:
As soon as all of this is done, the agency will contact you to let you know that you are ready to go. If this sounds daunting to you, don’t worry. There is a trained team of professionals who is willing to lend a helping hand to make sure that your project proceeds smoothly.
If you are looking for a USDA OTC Loan lender, connect with a trained and friendly, mortgage professional at GO Mortgage. At GO Mortgage, our goal is to provide comprehensive services as we walk you through the process of applying for this loan from beginning to end. With construction mortgage experts on your side, you’ll be sure to have a smooth process and love your home! We are licensed in 35 states including a team specifically for Minnesota loans. Contact us today to learn more about our services!