I have seen conflicting information about whether you can do a new build with a USDA Guaranteed Loan, so I have a few questions.
Here is our situation.... we make a combined 72K/yr (she is salaried at 48K and I am self employed at 24K). We are looking at a lot that is just under 3 acres in a rural setting per USDA guidelines and the cost is just over 30,000.
HOWEVER, her mid-score is currently around 580 (mine is 680). So my guess is it will take 5-6 months to get her up to 640, based on paying down her utilization, getting rid of some medical debt and overall cleaning up of credit report.
Here are the options we are trying to figure out and whether they are possible:
1) Buy the land now based just on my score/income..... and then try to get USDA loan together for a new build next spring.
2) Try to get the sellers to agree to a purchase option agreement that gives us the sole right/option to purchase the land within the next six
months. At that point in time we would be able to package the land and new build together with a USDA Guaranteed loan.
3) Wait until spring and hope/pray that the lot is still available (not likely in our area due to lack of lots for sale and the low price of this one) and then package the land and new build together with a USDA Guaranteed loan.
Any suggestions are appreciated..... THANKS!
Starting Score: EQ 641, TU ???, EX ??? (myfico 6/7/13)
@Genkeim wrote:USDA can be used for new construction. Don't have any knowledge which of your options is best or doable.
I'm assuming you've checked on the USDA website and make sure you're under the income guidelines? In my area it's like $74,500 or close to it. USDA will use some strange ways of figuring your income also. Check out this document http://www.rurdev.usda.gov/SupportDocuments/an4714.pdf it lists the methods they use.
Also check out the credit rebuilding forum. My starting scores were low and was able to get over 640 in under 3 months. You might be able to do this faster than you think.
I'd speak with a LO that is knowledgable about USDA loans. IIRC the actual loan process won't start until about 45 days out from the house being done, so even if you can get close to the 640 they can start building while you get last few points.
Yes, we are under the income limits.
I e-mailed the local USDA office about doing a new build with a USDA loan. Below is their reply, which makes me think it is just about finding a lender willing to do this type of loan.
"Yes, new construction including the purchase of the lot is an allowable loan purpose. All approved lenders have the option to do a new construction loan with the program.
Let me know if you have further questions."
XXXXX XXXXXXX | GRH Coordinator
Rural Development
U.S. Department of Agriculture
Sounds like you're good to go. Make sure you find a lendor that's familiar with USDA and you should be good 
Good luck and keep us updated!