There are United States Department of Agriculture (USDA) construction loan options available where you can purchase your own land and build your own home on it. This type of loan can even have your long-term mortgage wrapped in it as well. That is a land, build out, and mortgage wrapped into one loan! This type of loan does not require any type of down payment, either. There is also only one set of closing costs instead of three. Unfortunately, these types of loans can be difficult to find as there are a lot of rules and requirements involved and particular eligibility requirements as well.
Like all other ares of life and important decisions that need to be made, make sure you look into all available options to be sure you find the right option that fits your needs. There may be other loan options that are easier to obtain since they have less requirements.
The fact that you can obtain 100% financing for this type of loan is attractive to many people – this even includes the downpayment…it is not required! You are also not required to make payments on the home during construction.
However, there are some drawbacks to this type of loan. Starting with the fact that it can be difficult to find…patience is a must when looking into this type of loan! There are many parties involved so if you have a deadline, you may find some difficulty. It is also likely that the interest rate will be higher than other loan options. (Keep in mind that it is possible you will not have this interest rate forever though!)
We wanted to make sure you were aware of this type of opportunity that may be available to you. It may not work for you or be beneficial – but at least you are aware this opportunity may be out there for you.