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USDA Construction Loan Requirements

A USDA construction loan is a mortgage that is supported by the U.S. Department of Agriculture (USDA). The program’s goal is to make housing more accessible and affordable in rural areas. Similar to a traditional USDA loan, homebuyers borrow money from a conventional lender, and the USDA backs the loan. Contrary to a regular USDA loan, which enables borrowers to buy an existing home, a USDA construction loan enables borrowers to finance the construction of a home.

USDA Construction Loan Benefits

The USDA loan program is a government-backed mortgage program that helps low- and moderate-income borrowers become homeowners.

The program works like a conventional mortgage, but it is more flexible and forgiving than conventional mortgages. The program also has some great benefits for builders and developers, including:

  • No down payment requirements – There is no need for a down payment with a USDA loan.
  • Flexible credit requirements – USDA loans do not require a minimum credit score. As a result, more people will qualify for the program.
  • Affordable mortgage rates – USDA loans offer a competitive interest rate for borrowers, which is typically lower than conventional mortgages.
  • Lower interest rates – USDA loans offer competitive interest rates for borrowers, which is typically lower than conventional mortgages.
  • Terms up to 30 years – The USDA offers terms up to 30 years.
  • 100% financing available – All eligible USDA loans offer 100% financing for qualified borrowers.
  • Credit report requirements – USDA loans require no minimum credit score requirements. This makes it easier to qualify for a loan.