Can I build a home with a USDA direct loan?

We are in need of a new home on our property and we are eligible for a Usda direct home loan. We are not approved as of yet, but it's something that we are looking into. For someone who has had this experience, how would I go about finding a contractor to build my home with this sort of loan? Do they have contractors that they use? Is it difficult to obtain one to build for you? Thanks!

6 Answers

  • 7 years ago
    Favorite Answer

    No, it is not a construction loan.

    You would need to obtain a conventional construction loan. When construction is finished and it is time to pay the loan (due upon completion) you can use the USDA loan then, as long as the house appraises high enough to pay the construction loan.

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  • 7 years ago

    YES! If the other answerers bothered to do a little research, they would clearly know this. The first sentence (under "purpose" of direct loans) clearly states that the loan can be used to build. Direct loans require you to work with USDA agents on virtually every aspect of the loan, so you would need to follow their directions.

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  • GMan
    Lv 6
    7 years ago

    Very easy to find a contractor to build a home and just as easy to get ripped off. You need an interim/construction loan. Before you get that you will need to show house plans and an estimate on construction cost.

    You also need to make sure you do things in proper order: Plumbed prior to pouring a slab, wired before you drywall.. its very easy to forget till its too late. Yahoo Search "Build your own home" for detailed help

    Find a builder that is already building homes, not just some guy with a hammer and a truck.

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  • 7 years ago

    I don't believe a USDA loan can be used to construct a home, no.

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  • 28AKO
    Lv 5
    6 years ago

    Usda want pay to have a home built if its not your first home and u already own one

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  • Anonymous
    5 years ago

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