November 17, 2019

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The One-Time Close Construction Loan: VA, FHA, And USDA Options

The One Time Close Loan: VA, FHA, And USDA Options

There are two general types of construction loan. One construction loan has two applications and two closing dates, requiring a new credit check for each phase of the loan-the construction itself and the mortgage.

Another type, the One-Time Close / Single-Close construction loan, has only one application and closing date, protecting the borrower from potential complications associated with a second loan application.

There is an FHA One-Time Close loan, but also a VA OTC version of the program and a USDA OTC option available for those in qualifying rural areas. What do these loans have in common with each other?

FHA One-Time Close / Single-Close Construction Loans Versus VA One-Time Close Loans

The FHA and VA One-Time Close / Single-Close loan programs are quite similar. Both require builders on a “registration” list, both require the borrower to use escrow, and neither the VA or FHA construction loan programs allow the borrower to get cash back on the transaction in general except for refunds.

The difference between the VA and FHA One-Time Close programs have a lot to do with who can apply-FHA loans are open to any financially qualified borrower regardless of previous home buying or home owning experience.

There is no income cap for FHA loans, and you do not have to be financially disadvantaged to use the program.

VA One-Time Close construction loans are open only to qualified borrowers who have served a minimum time in uniform as a member of the United States military.

The general public is not able to apply for a VA construction loan, but eligible veterans and certain qualifying surviving spouses of military members can. Talk to a loan officer about your VA home loan eligibility if you want to explore your One-Time Close options as a VA loan.

USDA One-Time Close / Single-Close Close Construction Loans

The USDA version of the One-Time Close construction loan is different than the FHA version because USDA construction loans are available only in qualifying rural areas.

There may be income restrictions for this type of loan, and borrowers should know the income requirements will vary depending on zip code and other factors. USDA OTC Construction loans, similar to FHA One-Time Close loans, require a builder’s warranty.

The USDA technically permits single-family homes, manufactured housing, and condo projects. However, lender requirements may also apply and the type of dwelling you wish to build may be limited to stick-built housing or to certain number of living units depending on the lender, state law, and other factors.

Learn More About FHA, VA and USDA One-Time Close / Single-Close Mortgages

We have done extensive research on One-Time Close / Single-Close mortgage loans and spoke directly to the licensed lenders for most states. These 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.

Your response to authorizes us to share your personal information with a licensed mortgage lender in your area to contact you.

Please note that the One-Time Close / Single-Close Construction Program only allows for single family dwellings (1 unit) – and NOT for multifamily units (no duplexes, triplexes or fourplexes).

  1. Send your first and last name, e-mail address, and contact telephone number.
  2. Tell us the city and state of the proposed property.
  3. 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.
  4. Are you or your spouse (Co-borrower) eligible veterans?  If either of you are eligible veteran’s, the down payment is $0 up to the maximum VA lending limit for your county. If not, the FHA down payment is 3.5% up to the maximum FHA lending limit for your county.
Bruce Reichstein - Staff Writer

By Bruce Reichstein

April 27, 2018

Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.

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About was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

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