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Featured Image for Now Offering: USDA One Time Close Construction Loan
Josh McBroom

Have you dreamed of being able to build your own home, but thought it wasn’t realistic? Does the existing home market not offer a home that meets your needs or desires? Or have you fallen in love with a piece of land, but it doesn’t have a home on it? These are some of the obstacles our USDA One Time Close Construction Loan program can help you overcome. Along with its appeal to buyers, this loan program also has fantastic benefits for builders and realtors!

What is it?

The USDA One Time Close Construction Loan offers a construction-to-permanent loan that gives borrowers the ability to combine the financing of both. It gives you one single loan with one closing and a fixed interest rate, so you won’t have to go through two closings, pay closing costs on two loans, or worry about changing interest rates when the home is finished. The USDA focuses on promoting homeownership in rural areas, so keep that in mind when considering this program.

Why it’s good for: buyers

This is all you really need to know about the USDA One Time Close Construction Loan: it finances 100% of the construction costs with no down payment.

I’m just kidding – there’s some other cool stuff, too. For instance, there’s only one appraisal before construction starts. This means that the loan is set in place before construction and you only have to pay for one appraisal. With other programs, it usually looks something like this: one appraisal for the construction loan and one appraisal for the permanent loan, along with two sets of closing costs as the sprinkles on top.

Besides this, there are many other benefits:

  • The closing costs can be included in the loan amount.
  • Payments during the construction process can be financed into the loan.
  • The interest rate is set before construction starts, with 30-year fixed interest rates available.
  • The process for project and builder approval, and construction disbursement is streamlined, automated and transparent.
  • The program has planned contingency reserves for cost overruns.

How do I qualify?

There are, of course, requirements you’ll need to fit, like credit and income qualification. You will also need to get approval for both the project and your chosen builder. At Flat Branch Home Loans, we aim to make the qualification process as easy and quick as possible, like getting an automated approval from the USDA’s underwriting system, GUS (Guaranteed Underwriting System). Please reach out to one of our loan officers who would be more than happy to help you find out if you qualify!

Why it’s good for: builders

This program eliminates a lot of the stress and hassle that comes with the financing for other kinds of construction loans. The loan is fully funded at closing, and that’s when the draw and disbursement schedule is agreed upon as well. Here’s a few other benefits this program has for builders:

  • It leaves your line-of-credit open for other projects since you don’t have the overhead and carrying costs of speculative building.
  • There’s more efficient protocol for change orders.
  • The program has planned contingency reserves for cost overruns.
  • Our verification process will make you a Flat Branch-approved builder, meaning more business opportunities in the future!

Why it’s good for: realtors

The USDA One Time Close Construction Loan gives you a little more room to help your clients find their dream home. This frees them of the existing inventory of properties that they’d have to settle on, rather than finding the perfect fit. You can feel confident that you’ve given your client a better experience. Additionally, instead of getting your commission once construction is complete and the home is sold, you earn your commission at closing.

This program sounds pretty great, right? It’s a great option for the areas we love to serve. If you want to find out if you qualify or have any questions, please reach out to me or one of your local loan officers today!

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