Together, America Prospers
Combination Construction-to-Permanent
(Single Close) Loan Program
Single Family Housing
Guaranteed Loan
Single-close loans are another
tool Rural Development offers to
increase financing opportunities
for low- to moderate-income
applicants searching for affordable
rural housing. Approved lenders
and homebuilders participating
in the Single Family Housing
Guaranteed Loan Program can
use the combination construction-
to-permanent loan to close
with one signing and receive
a loan note guarantee before
construction begins.
What are some of the benefits of
single close loans?
• Reduced risk for lenders: By
issuing a loan note guarantee
before construction begins, USDA
allows lenders the opportunity to
immediately package the loan in
a mortgage-backed security, or
sell it to a participating investor.
This decreases new construction
lending risks and can lead to
quicker revenues.
• Reduced risk for builders: Because
the loan is guaranteed by USDA and
fully funded at closing, homebuilders
are not at risk when investing capital
in a home construction project.
• Increased economic activity:
New home construction generates
local and regional business for
subcontractors, hardware stores,
landscapers, utility companies,
inspectors, appraisers, and other
housing industry suppliers.
How do we get started?
• Lenders: To be eligible to participate
in the combination construction-to-
permanent loan program, a USDA
Rural Development approved lender
must have two years of experience
in originating and administering
construction loans.
• Homebuilders: USDA approved
lenders review homebuilders’
qualifications, and determine their
eligibility to participate in the single-
close program.
Where are these loans available?
• Single-Close Lenders and Builders
financing is available in eligible rural
areas with populations up to 35,000.
A map of eligible areas is available at
this link:
https://eligibility.sc.egov.usda.
gov/eligibility/welcomeAction.
do?pageAction=sfp
How can loan funds be used?
Funds can be used to build and
purchase single family homes,
including eligible manufactured
homes and condominiums. This
includes purchasing a lot, reasonable
construction administrative costs,
contingency reserves, inspection fees,
builder’s risk insurance, landscaping
costs, and other authorized items.
What are the loan terms?
Interest rates are fixed at loan closing
and before construction begins.
The appraised value determines the
maximum loan amount. This program
allows for two product options:
• Standard, with interest-only
payments made during construction
• Securitizable, in which full principle,
interest, tax, and insurance (PITI)
payments are made.
The securitized version does not
require a loan modification once the
build is completed. This allows the
loan to be packaged or sold prior to
construction, without a warehouse
line of credit provided to the loan
originator. Both options allow for
payments made during construction
to be escrowed from loan funds, and
both receive Rural Development’s loan
note guarantee at signing, before a
shovel ever goes into the ground.
Combination Construction-to-Permanent
(Single Close) Loan Program
Who can answer questions?
• Lenders and homebuilders
may direct questions to:
• Home buyers may direct inquiries
to: sfhgld.program@ usda.gov
What law governs this program?
• 7 CFR Part 3555
• https://www.rd.usda.gov/resources/
directives/handbooks
• RD Instruction 1924-A
NOTE: Because citations and other information may be subject to change,
please always consult the program instructions listed in the section above titled
“What Governs This Program?” You may also contact your local office for
assistance. You will find additional forms, resources, and program information
at rd.usda.gov. USDA is an equal opportunity provider, employer, and lender.
September 2021
