The U.S. Department of Agriculture's Rural Housing Service is taking another shot at creating a "single-close, construction-to permanent mortgage program," according to a recent National Mortgage News report.
"Under the pilot program, the RHS provides an upfront government guarantee on the construction loan that also allows the lender to increase the interest rate by 200 basis points during the construction phase," according to NMN.
"This is a departure from traditional RHS loans, which do not allow increases in the normal interest rate, according to Cathy Glover, acting RHS deputy administrator for single-family loans."
There are a few points that the USDA happen to be pushing as upsides. The newly designed program will allow you to "float the construction interest rate down to allowable maximum rate when construction is complete." It adds a bit of cushion during the construction period, according to the report.
Whatever funds aren't used will be applied to the loan amount. In addition, the report also states that loans are guaranteed before construction begins.
To learn more about this new program, click on the image above.