In short
A USDA construction loan is a single-close, 0% down loan for building a new home in an eligible rural area. It can cover land, construction and closing costs up to 100% of appraised value, with a 30-year fixed-rate loan locked at closing and up to 12 months of payments escrowed during the build.
Reviewed by Scottie Campbell, NMLS #1610726 · Last updated October 18, 2026
What is a USDA construction loan?
A USDA construction loan is a single-close loan that finances building a new home in an eligible rural area with 0% down. It can cover up to 100% of the appraised value, including land, construction and closing costs, with a 30-year fixed-rate loan locked at closing. Construction can run up to 12 months, with up to 12 months of payments escrowed from the loan. Household income must be at or below 115% of area median, and USDA sets no minimum credit score.
Key takeaways
If you've pictured a new home with a little elbow room outside the city, the USDA single-close construction loan may be the way to get there with no down payment. It covers the land, the build and your closing costs in one loan with one closing. I'm Scottie Campbell with Waymaker Mortgage Company, and I'll help you check the location and income rules, line up an approved builder and plan your build from the first draw to move-in.
Build in the Country With No Down Payment
USDA loans are best known for helping moderate-income families buy homes in rural areas with no down payment. Fewer people realize USDA also offers a single-close construction loan. If you want room to breathe, a little land and a brand-new house built the way you want it, this program is worth a serious look.
Here's how it's structured, in plain terms:
| Feature | USDA single-close construction |
|---|---|
| Closings | One, before the build starts |
| Down payment | 0% |
| Financing | Up to 100% of appraised value, covering land, construction and closing costs |
| Permanent loan | 30-year fixed-rate, locked at closing |
| Construction period | Up to 12 months |
| Payments during construction | Up to 12 months of payments can be escrowed from the loan |
| Contingency reserve | Optional, up to 10% |
| Builder | Lender-approved, with a fixed-price contract |
| Income | Household income at or below 115% of area median |
| Location | Must be in a USDA-eligible rural area |
| Credit | USDA sets no minimum score; approval is borrower specific |
What Those Features Mean for You
One closing, before ground is broken. You're approved and closed once. When the home is finished, the loan continues as your permanent USDA mortgage without requalifying.
Up to 100% financing, including closing costs. If the finished home appraises high enough, the loan can cover the land, the construction and your closing costs. That's a big deal for families who have steady income but haven't been able to stack up a large savings account.
A 30-year fixed-rate loan locked at closing. Your permanent loan terms are set before construction starts, so you're not waiting until move-in to find out what the long-term mortgage looks like. As for the rate itself: Your rate depends on your scenario and the day's market. Reach out and I'll price it for real.
Payments escrowed during the build. This is one of my favorite features. Up to 12 months of payments can be escrowed from the loan during construction, which means you may not be juggling rent and a construction payment at the same time.
A contingency reserve. You can include an optional reserve of up to 10% for the unexpected. Builds rarely go exactly to plan, and a cushion helps keep surprises from turning into stress.
The Two Eligibility Tests: Location and Income
USDA has two gatekeepers that most loans don't.
Location. The property has to be in an eligible rural area. "Rural" is broader than many people think, and plenty of areas outside city centers qualify. We check the specific lot before you commit to it.
Income. Your total household income has to be at or below 115% of the area median for your county and household size. USDA counts household income, not just the income of the people on the loan, so we look at everyone in the home.
The Builder and the Contract
USDA construction requires a lender-approved builder and a fixed-price contract. A fixed-price contract means the builder commits to a set price for the home as specified, which protects you from mid-build cost creep. Your builder is reviewed for licensing, insurance and experience, so send me their information early.
Credit: Borrower Specific, Not One-Size-Fits-All
USDA doesn't set a minimum credit score for this program. Approval is borrower specific, which means we look at your whole story: payment history, income stability, debts and the reasons behind any rough patches. I never want anyone to feel judged about their credit. If something needs work first, I'll put together a Mortgage Action Plan, and we'll get there together. Can't do it now doesn't mean can't do it ever.
Why Work With Me on a USDA Build
You're talking to the owner of this company. Waymaker Mortgage Company works with multiple investor partners, so your file isn't stuck with one underwriting desk and one set of rules. If one investor's guidelines don't fit, I take your file to one that does.
I'll also run a Total Cost Analysis comparing a USDA build against other ways to get into a home, like buying an existing USDA-eligible property, so you can see the total cost over the time you'll own it. My job is to educate and empower you. Your job is to decide.
Ready to Look at Land?
If you're dreaming about a new home on a little acreage within reach of Georgetown, TX, feel free to text me before you put money down on a lot. We'll confirm the location and income fit first, then get you rocking and rolling.
Information on this page is general and educational. It is not a commitment to lend or an offer of credit. Programs, guidelines and eligibility change and depend on your full scenario. Waymaker Mortgage Company, NMLS 2440476. Equal Housing Lender.
Quick facts
- Minimum credit score
- No USDA-set minimum; approval is borrower specific
- Down payment
- 0% (up to 100% of appraised value)
- Permanent loan
- 30-year fixed-rate, locked at closing
- Construction period
- Up to 12 months, with up to 12 months of payments escrowed
- Income limit
- Household income at or below 115% of area median
- Location
- USDA-eligible rural area
Is this loan right for you?
Who it's for
- Moderate-income families with household income at or below 115% of area median
- Buyers who want to build in a USDA-eligible rural area
- Families with steady income but limited savings for a down payment or closing costs
- Buyers who want construction-period payments escrowed so they aren't doubling up on rent
Who it may not fit
- Households whose income is above 115% of area median
- Anyone building in a city-center or otherwise ineligible location
- Owner-builders or anyone without a lender-approved builder and fixed-price contract
Pros and cons
Pros
- 0% down, with up to 100% financing including closing costs
- One closing before construction begins
- 30-year fixed-rate loan locked at closing
- Up to 12 months of payments escrowed during the build
- Optional contingency reserve of up to 10%
Trade-offs to weigh
- Property location and household income must both meet USDA limits
- Builder must be lender approved and work under a fixed-price contract
- Primary residence only
Frequently asked questions
What credit score do I need for a USDA construction loan?
USDA doesn't set a minimum credit score for this program. Approval is borrower specific, so I look at your full picture: payment history, income stability, debts and the story behind any setbacks. If something needs work, I'll put together a Mortgage Action Plan.
Does a USDA construction loan really cover closing costs?
It can. The loan can finance up to 100% of the appraised value, including land, construction and closing costs. Whether everything fits depends on how the finished home appraises, so we review that early.
Do I make house payments while the home is being built?
Up to 12 months of payments can be escrowed from the loan during construction, which can keep you from paying rent and a construction payment at the same time. Construction itself can run up to 12 months.
How do I know if a lot is USDA eligible?
The property must be in a USDA-eligible rural area, and many areas outside city centers qualify. Send me the address or parcel before you commit to a lot, and I'll confirm eligibility along with the income limit for your household.
What are the income limits for USDA construction?
Total household income must be at or below 115% of the area median for your county and household size. USDA counts everyone in the household, not only the borrowers, so we'll review the whole picture together.
Can I pick any builder?
Your builder must be approved by the lender and work under a fixed-price contract. If you already have a builder in mind, send me their information so we can start the review while we work on your approval.
What rate will I get on a USDA construction loan?
Your rate depends on your scenario and the day's market. Reach out and I'll price it for real.
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Last updated October 18, 2026 · Reviewed by Scottie Campbell, NMLS #1610726. This page is educational and not a commitment to lend; program details change — ask for current figures.