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 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.