A USDA single-close construction loan lets moderate-income buyers build a home in an eligible rural or suburban area with no down payment. One loan covers the land, construction and the finished home, and converts to a 30-year fixed USDA loan. Most lenders want a 640 credit score, and household income must be under the county limit, which is $119,850 for 1 to 4 people in most counties.
USDA construction loan requirements
| Requirement | USDA single-close construction loan |
|---|---|
| Down payment | none |
| Credit score | no USDA minimum; most lenders prefer 640+ |
| Debt-to-income | 41% or less |
| Income limit | $119,850 for 1–4 person households in most counties; higher in some areas and for larger households |
| Location | a USDA-eligible area (check the USDA property eligibility map) |
| Occupancy | primary residence only |
| Builder | USDA-approved, licensed, 2+ years building single-family homes, $500,000+ liability insurance |
| Home | must meet current thermal codes and come with a new-construction warranty |
| Permanent loan | 30-year fixed |
How does a USDA construction loan work?
- Check that the property address is in an eligible area and that your household income is under the limit.
- Find a lender that offers the USDA single-close program and a USDA-approved builder.
- Close once, before construction begins; closing costs are paid once.
- Funds are disbursed in stages as construction progresses.
- When the home is complete, the loan converts to a standard 30-year fixed USDA loan.
Who should consider a USDA construction loan?
Buyers with moderate incomes and little cash for a down payment who want to build in a small town or rural area. If your income is above the limit or the land is outside the eligible area, look at FHA or conventional construction-to-permanent loans.
Frequently asked questions
Does USDA require mortgage insurance?
USDA loans carry a guarantee fee, charged upfront and annually. Ask your lender for the current amounts.
Can I build a large or luxury home with a USDA loan?
USDA loans are for modest primary residences, and your income must be within the county limit.
More on construction loans
- How construction loans work
- Construction loan rates
- Construction-to-permanent loans
- FHA construction loans
- VA construction loans
- USDA construction loans
- How to get a construction loan
- Construction loan calculator
Sources
- Yahoo Finance: USDA construction loans (April 2026)
Loan terms change often and vary by lender. Nothing on this page is a loan offer or financial advice: confirm current rates, fees and eligibility with lenders before you apply.