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Boosting Rural America’s Housing Supply with USDA’s Construction-to-Permanent Financing Program

Posted by USDA Rural Development Staff in Equity Rural
Jun 16, 2022
Homebuyers looking over housing blueprints in the construction of new house

Boosting the housing supply is crucial to bringing homeownership within reach for millions of Americans. USDA Rural Development and its lending partners have affordable financing options for homebuyers who are considering building their dream home.

Through USDA Rural Development’s Combination Construction-to-Permanent Loan Program (PDF, 158 KB), USDA-approved lenders with experience in construction loans can help borrowers who want to build a home. This program streamlines the lending process and saves money for homebuyers because they pay closing costs on one loan instead of on a construction loan and a permanent loan.

This program can help support housing construction in rural areas throughout the country.

For example, USDA recently partnered with 1st Signature Lending, based in Indiana, to help people build homes financed through the Combination Construction-to-Permanent Loan Program. Chief Operating Officer Joe Willing highlights many of the program’s benefits.

“Of course, one of the biggest benefits that attracts us to the program is the fact that these loans are guaranteed at closing, even before construction begins,” Willing said. “This gives us confidence to market this loan program to our customers knowing that USDA is standing behind the guarantee. USDA has also structured their loan for secondary market acceptance. The securitized feature allows a lender to free up capital by transferring these loans to secondary during construction.

“[This program] is the best-written, single-close construction program out there,” he said. “The program guidelines offer a lender flexibility in how they take their loan offerings to market. We are proud to be part of creating affordable housing, through offering affordable financing through the [program].”

The Combination Construction-to-Permanent Loan Program supports President Biden’s recent action plan to help close America’s housing supply shortfall in 5 years, starting with the creation and preservation of hundreds of thousands of affordable housing units in the next three years. The President’s plan also will help renters who are struggling with high rental costs, with a particular focus on building and preserving rental housing for low- and moderate-income families.

For more information, download the Combination Construction-to-Permanent Loan Program (PDF, 158 KB) fact sheet.

Details are found in Chapter 12 of Handbook 1-3555 (PDF, 2 MB).

Category/Topic: Equity Rural