Are construction loans available for first-time home buyers? Some may feel daunted at the idea of having a house built for them from the ground up, but the reality is that some house hunters would rather have a home built just for them rather than buying one with a previous owner.
What options are available to first time home buyers who want a construction loan?
The first thing to remember is that being a first time buyer does not count against you when looking into your construction loan options. What you should be more concerned with is the nature of the loan itself.
Some construction loans feature two applications and two closing dates, but One-Time Close construction loans / Single-Close construction loans offered by the VA, USDA, and FHA allow a single application and closing date for the entire transaction.
The FHA and VA have no specific programs aimed at benefiting those who have never bought a home before. Participating lenders may, however, and it’s important to ask the lender about any available first time buyer or first time borrower programs available in your housing market.
One Time Close construction loans are not out of reach for those with medium to lower incomes; the USDA offers construction loans in a program that has income restrictions. USDA One Time Close construction loans are similar to VA and FHA construction loan offers in that the borrower must use an approved builder, is required to have an escrow account, and must not get cash back on the transaction (except for refunds).
Construction loans are not out of reach for financially qualified borrowers regardless of their experience as home owners. Construction loans sound expensive, and it’s true that you may pay more to have a home built to suit. But for many, the results are worth the expense.
Learn More About FHA, VA and USDA One-Time Construction Close to Permanent / Single-Close Construction Loans
One-Time Close Loans are available with VA, FHA and USDA Mortgages. We have relationships with several large Mortgage Banking firms who specialize in these loans which also go by the following names: 1 X Close, Single-Close Loan or OTC Loan.
Our extensive research on these programs and their guidelines allow us to educate potential home buyers who want to explore purchasing a newly constructed home versus purchasing a resale home while utilizing the same down payments for each product type.
We are constantly updated on these programs and have extensive knowledge on VA (Department of Veterans Affairs), FHA (Federal Housing Administration) and USDA (United States Department of Agriculture) One-Time Close Construction programs.
We speak directly to the licensed lenders that originate these residential loan types in most states. They are qualified mortgage loan officers who work for lenders that know the product well. Each company has supplied us the guidelines for their product.
If you are interested in being contacted by one licensed lender in your area, please respond to the below questions to save time. All information is treated confidentially.
Please note that investor guidelines for the FHA, VA and USDA One-Time Close Construction Program only allows for single family dwellings (1 unit) – and NOT for multifamily units (no duplexes, triplexes or fourplexes). Home types include: Site-Built, Modular or Manufactured Homes.
In addition, the following are “NOT” allowed under these programs:
Kit Homes – Steel Framing Kits, Barndominiums, Log Cabin Homes, Shipping Container Homes, Stilt Homes, Solar or Wind Powered Homes.
Your response to firstname.lastname@example.org authorizes us to share your personal information with a licensed mortgage lender that is familiar with your area to contact you.
- Send your first and last name, e-mail address, and good contact number.
- Tell us the city and state of the proposed property.
- Tell us your credit score and/or the Co-borrower’s credit score, if known. 620 is the minimum qualifying credit score for this product.
- Are you or your spouse (Co-borrower) eligible veterans? If either of you are eligible veterans, the down payment is $0 up to the maximum amount that the debt ratio will allow – there are no maximum loan amounts as per the Department of VA. Most lenders will go up to $750,000. If not, the FHA down payment is 3.5% up to the maximum FHA Lending Limits for your county and the USDA down payment is $0 and based on maximum income.