Can you purchase land separately with the USDA No Down Payment Construction loan?

https://www.usdaloanpro.com/blog/2019/02/22/can-you-purchase-land-separately-with-a-usda-no-down-payment-construction-loan/

Can you purchase land separately with the USDA No Down Payment Construction loan?

In today’s video, I will explain how purchasing land can be included with the USDA construction to permanent mortgage along with other eligible loan costs.

And if you have not yet done so, feel free to download our newest “USDA Construction Loan Blueprint for Success” with the link below. This educational resource is designed to help walk you through the USDA qualifying process step-by-step and designed for both homebuyers and Realtors alike.

So, how do you buy land and build a home with a USDA No Down Payment Construction loan?

Can you build on land that you already own or purchase land with proceeds from the construction loan?

The USDA Single-Close Construction to Permanent No Down Payment loan is eligible for new single-family residences, modular, and manufactured homes and allows for draws during the construction phase which occurs after closing.

Additionally, it provides tremendous flexibility because you may either build on land that you already own or purchase land to be built on through the USDA construction loan.

Further, unlike other programs which only allow loan amounts based on the sales price, USDA Single-Close new construction guidelines will permit financing of loan related costs up to the appraised value of the property, with examples of those eligible costs being:

I. Land

• Acquisition cost of the land.
o Land may be purchased separately from a third party or directly through the builder contract
o If land is purchased separately, the seller would receive their proceeds at closing as normal
• Payoff the balance of land to be utilized in the construction of the dwelling.
o If the land was previously purchased and has an existing loan, funds may be used to pay off the outstanding balance owed with the remaining loan proceeds used for construction costs

II. Construction Hard Costs

• Costs inside the contract to be detailed on the construction budget agreed upon by the builder and borrower;
• Costs outside of the contract, paid to subcontractors, for contributive work such as well and septic installation, roads/driveways, utility hookups, landscaping, etc.

III. Construction Soft Costs

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

While this is not an all inclusive list of eligible costs, it does demonstrate the high amount of flexibility found under the USDA Single-Close New Construction to Permanent program, and while you are not able to purchase raw land on its own, No Down Payment financing allows for the purchase of land along with funding for the construction of a primary residence all with the convenience of one closing prior to the construction starting.
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Видео Can you purchase land separately with the USDA No Down Payment Construction loan? канала Metroplex Mortgage Services