A build has costs a finished-home purchase never sees: permits, engineering, draw inspections, insurance on a half-built house, and months of paying for a place you cannot live in yet. USDA's regulation lists what can be rolled into the one loan, and it covers more of those than most people expect.
7 CFR 3555.105(c) allows the loan to include:
The price of the land the home is built on.
Architectural and engineering fees, permits, surveys, title updates, draw control and inspection fees, and landscaping.
A contingency reserve up to a percentage USDA sets, plus builder's risk or course of construction insurance.
Reasonable closing costs, interim construction interest, and a payment reserve.
The ceiling is the home's fair market value from a licensed or certified appraiser.
This is where the USDA version is unusually generous. The first regular principal and interest payment may be postponed up to one year, depending on the construction period. Alternatively, the lender may fund a reserve covering up to 12 months of principal, interest, taxes and insurance; with that reserve, no loan modification is needed when construction ends.
Construction-period interest is payable monthly, either by you or from an interest reserve. The interim construction rate may be higher than your note rate, but once construction ends the rate must drop to no higher than the note rate. The permanent rate itself is fixed and locked before closing.
Condominiums are ineligible, including detached and site condominiums. The program covers a single family home, or buying an existing single family home that needs required rehabilitation.
Money left after the build is fully paid out goes to your principal. You do not receive loan funds after closing, with one narrow exception: unused prepaid expenses you paid with your own money.
USDA's annual fee starts the month after closing, not after move-in. Who can build the home is on builder and lender rules; where you can build is on land and site rules.
Source: 7 CFR 3555.104(a) Interest rate and 3555.105(c) Use of loan funds and (d) Terms (eCFR, current 9/24/2026). Handbook HB-1-3555 and lender overlays add detail. Not a commitment to lend.
Give us the address or the general area. We'll run the USDA eligibility check, look at your situation, and lay out exactly what building there would take - no cost, no obligation.