Does USDA offer a construction loan?

Yes. USDA's Single Family Housing Guaranteed Loan Program includes a single-close construction-to-permanent option that finances the lot and the build with one closing and up to 100% financing. It is not a separate program — the same eligible-rural-area and household income-limit rules apply, and the structure is governed by HB-1-3555 Chapter 12.

Do I need a down payment for a USDA construction loan?

No. The USDA single-close construction-to-permanent loan allows zero down payment and offers up to 100% financing for eligible borrowers. The loan carries a financeable 1.0% upfront guarantee fee and a 0.35% annual fee, and the lender requires a construction contingency reserve of at least 2% of the construction contract, capped at 10% of construction cost.

Does household income still have to be within the USDA limit to build?

Yes. A construction loan does not waive the income test. Adjusted annual household income must be within the Guaranteed Loan limit for the lot's county and the household size — for the FY 2025 table (effective June 18, 2025, still in effect for 2026) the moderate-income floor is $119,850 for one-to-four-person households and $158,250 for five-to-eight-person households in most counties, with higher-cost counties higher.

When does the USDA guarantee take effect on a construction loan?

With the single-close structure, USDA's loan note guarantee may be issued once the interim construction loan is closed, without waiting for the property to be completed. Because there is one closing rather than two, the construction financing converts to the permanent mortgage without re-qualifying — USDA and the participating lender still make the final eligibility determination.

Scenario template

USDA construction loan: single-close construction-to-permanent

How the USDA single-close construction-to-permanent loan finances land and the build with one closing, and why it still runs the same rural-area and income-limit gates.

Last verified 2026-06-25

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Short answer

The USDA construction loan is the Single Family Housing Guaranteed Loan Program's single-close construction-to-permanent (CTP) option: one closing combines the interim construction loan and the permanent mortgage, with up to 100% financing. It still requires an eligible rural building site and household income within the Guaranteed Loan limit.

How to use this page

Use this when you plan to build on a rural lot rather than buy an existing home and need to see whether a USDA single-close construction loan fits before contacting a participating lender.

Deep dive

A USDA construction loan is not a separate program; it is the single-close construction-to-permanent (CTP) feature of USDA's Single Family Housing Guaranteed Loan Program. Searches for a 'USDA construction loan map' usually mean: can I build on a rural lot with USDA financing, and is the lot eligible? One closing combines the interim construction loan with the permanent mortgage, so the borrower signs once and avoids a second set of closing costs — USDA treats the transaction as a purchase. The build still has to clear the same two gates as any USDA loan: the lot must sit in an eligible rural area on USDA's map, and adjusted annual household income must fall within the Guaranteed Loan limit for that county and household size. As of the FY 2025 USDA income-limit table (effective June 18, 2025 and still in effect for 2026), that moderate-income floor is $119,850 for households of one to four people and $158,250 for households of five to eight people in most counties, with higher-cost counties exceeding those figures.

What a USDA single-close construction loan is

USDA's single-close construction-to-permanent loan combines the interim construction loan and the long-term mortgage into one closing. Because there is only one closing — which can save considerable closing costs — the Agency treats the loan as a purchase transaction. USDA Rural Development guarantees up to 100% financing, so an eligible borrower can finance the lot and the build with no down payment, and the loan note guarantee may be issued once the interim construction loan closes, without waiting for the home to be completed. The single-close structure is governed by HB-1-3555 Chapter 12.

How the USDA construction loan runs the same two eligibility gates

A construction loan does not relax USDA's eligibility tests. Gate one is location: the lot you intend to build on must fall outside USDA Rural Development's ineligible-area polygons, the same map an existing-home address is checked against. Gate two is income: the program is means-tested for households at or below 115% of the area median income, so adjusted annual household income must land at or below the county and household-size row in USDA's HB-1-3555 Appendix 5 income-limit table. Run the lot address through the property check and the household through the income screen before committing to plans — an ineligible lot or an over-limit household stops a construction loan exactly as it stops a purchase loan.

Down payment, fees, and the contingency reserve

USDA single-close construction loans allow zero down payment and finance the build with the same fee structure as a standard Guaranteed Loan: a financeable 1.0% upfront guarantee fee and a 0.35% annual fee built into the payment. To absorb change orders and unplanned construction costs, USDA requires a construction contingency reserve — at least 2% of the construction contract (inclusive of the contractor's fee and all hard and soft costs) and capped at 10% of the cost of construction. The reserve is funded at the construction-loan closing and held by the lender, and funds are released only for change orders approved by the Agency and the lender. This precheck does not estimate build costs, lot prices, or rates — those come from your contractor and lender.

Choosing a lender and contractor for the build

Not every USDA-approved lender offers the single-close product. A lender must carry the required construction-lending experience — two or more years, or a qualified agent with that experience — and USDA publishes a participating-lenders list for the construction-to-permanent program. USDA does not maintain a list of general contractors and cannot make referrals, so identifying a qualified builder is the applicant's responsibility, often with help from a real estate or lending agent. Take the precheck results — the eligible-area confirmation for the lot and the income-limit screen for the household — to a participating single-close lender, who confirms the official USDA determination and underwrites the build.

Common questions

USDA construction loan — answers to the questions builders and buyers ask

Does USDA offer a construction loan?: Yes. USDA's Single Family Housing Guaranteed Loan Program includes a single-close construction-to-permanent option that finances the lot and the build with one closing and up to 100% financing. It is not a separate program — the same eligible-rural-area and household income-limit rules apply, and the structure is governed by HB-1-3555 Chapter 12.
Is there a USDA construction loan map?: There is no separate construction map. A USDA construction loan uses the same property eligibility map as any USDA loan: the building lot must sit outside USDA Rural Development's ineligible-area polygons. Check the lot address against the eligible-area map first, then screen household income against the Guaranteed Loan limit before planning the build.
Do I need a down payment for a USDA construction loan?: No. The USDA single-close construction-to-permanent loan allows zero down payment and offers up to 100% financing for eligible borrowers. The loan carries a financeable 1.0% upfront guarantee fee and a 0.35% annual fee, and the lender requires a construction contingency reserve of at least 2% of the construction contract, capped at 10% of construction cost.
Does household income still have to be within the USDA limit to build?: Yes. A construction loan does not waive the income test. Adjusted annual household income must be within the Guaranteed Loan limit for the lot's county and the household size — for the FY 2025 table (effective June 18, 2025, still in effect for 2026) the moderate-income floor is $119,850 for one-to-four-person households and $158,250 for five-to-eight-person households in most counties, with higher-cost counties higher.
When does the USDA guarantee take effect on a construction loan?: With the single-close structure, USDA's loan note guarantee may be issued once the interim construction loan is closed, without waiting for the property to be completed. Because there is one closing rather than two, the construction financing converts to the permanent mortgage without re-qualifying — USDA and the participating lender still make the final eligibility determination.

Primary sources

Verified primary sources for this scenario

USDA Single Close Construction-to-Permanent Financing (factsheet)Date retrieved: 2026-06-25
USDA Combination Construction-to-Permanent (Single Close) lenders and builders informationDate retrieved: 2026-06-25
USDA Single Close Construction-to-Permanent Q&A (Rural Development)Date retrieved: 2026-06-25
USDA Single Family Housing Guaranteed Loan ProgramDate retrieved: 2026-06-25

Related checks

Use this scenario with the next USDA checks, the source methodology, and the FAQ before taking a result to a lender.

Recommended next checks

USDA Property Eligibility by Address when the building lot needs a map-backed check that the parcel sits in a USDA-eligible rural area before any build plan.
USDA Income Limits by County when the household needs to confirm it is under the county Guaranteed Loan income limit that a construction loan still enforces.
How Much USDA Loan Can I Afford? when the build budget needs to be sized against the lender's repayment ratios rather than the income-limit ceiling alone.
Can I Buy This House With a USDA Loan? when the rural-area, income, and payment signals for the finished home should be summarized in one buyer-ready scenario.
USDA Income Eligibility Map when the borrower is still separating the rural property map from the household income-limit workflow before planning a build.

Can I Buy This House With a USDA Loan?USDA Property Eligibility by Address USDA Income Limits by County How Much USDA Loan Can I Afford?USDA Income Eligibility Map Methodology and source dates USDA eligibility FAQ All USDA scenario templates

Sources

USDA area layerreadyVerified 2026-06-18 Census geocoderaddress inputVerified 2026-06-18 USDA income limitsFY 2025 snapshotUSDA FY 2025 income limits (effective 06/18/2025), still in effect for 2026; Verified 2026-06-18

USDA income-limit source USDA eligibility portal

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