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 constructionto-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-topermanent 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 singleclose 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: 

sfhgld.lenderpartner@usda.gov.

• 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