Not sure if this has ever been asked...

[John Widlacki]

Good morning BP community! I am reaching out because I have a unique question and I figured with the intelligent minds on here someone may have a solution. So I would like to build a home, it would be my first home. What I would like to do would be to acquire the land and build the home and then pro cure a USDA loan for the property and home. I like the USDA loan because of the hundred percent financing option, and the fact that they gave you 100% of the home value, so if the house is being bought for 100k but it's valued at 150k, you would get up to 150 K. I figured this would be a good way to get our first home, as well as have some working capital to purchase a multi family. I just don't know how to get the land and build the home without the loan first. Because obviously I do not have the working capital to just pay for it out right! And I don't think I can get another construction loan first, then switch it to a USDA loan and still get all the benefits. So any help or ideas would be greatly appreciated!

[Troy Luster]

John:  Looks like the USDA has created a program for this.  They call it Combination Construction to Permanent Loans.  Here is the link: https://www.rd.usda.gov/files/RD-RHS-SFHGSingleCloseLendersBuildersInfo.pdf

I'd find a local Realtor/Loan Officer that has done this before to help you maneuver around the pitfalls.  Don't think you'll be able to pull out cash though.  Building costs more than purchasing an existing home in most cases.  If you want to later refinance for case out, you will probably have to find a house that needs work.  Get it for a good deal (70% or less minus rehab costs) and then refinance to pull out cash.  Good luck.