If you are interested in building a home on your own lot instead of buying a house owned by someone else, the One-Time Close construction loan is an option worth considering.
Facts about One-Time Close mortgages include your options–there are FHA, VA and USDA versions of the One-Time Close Construction (OTC) loan. With a VA OTC, there is an option to put 0% down, FHA construction loans feature a low down payment of 3.5% of the adjusted price of the home in most cases.
Construction loans require you to work with an approved contractor so you should plan on spending some time searching for one.
Construction loans are sometimes hard to come by because borrowers don’t know the right loan to ask for, or are working with a lender who does not offer the loan you need. It’s best to tell your loan officer upfront if you are committed to building instead of buying, explain your price range, and see what the lender can do to help.
Participating lenders who offer One-Time Close loans will explain the program in detail, but don’t sign any paperwork if there are areas you don’t fully understand. Ask your loan officer to explain these areas to you for best results.
FHA construction loans, with their 3.5% down payment and low interest rates, permit the borrower to build a single-unit property using a licensed contractor. FHA loan rules technically let the borrower to act as her own contractor under the right circumstances but you will find that in general lenders may not permit this.
FHA loans have no income restriction, need-based requirements, and they do not require that the person having the home built to suit be a first-time home buyer.
VA One-Time Close mortgages feature a military service requirement and such loans are not offered to the public. borrowers who have qualifying military service will find the VA Construction Loan option an important option thanks to the 0% down option.
It pays to take extra time with a construction loan; it’s not good to be in a hurry. Construction projects can run into delays for a variety of reasons including weather, staffing, budget issues, delivery of materials, and more.
Expect to have a detailed conversation about project timelines, realistic move-in dates, and any required inspections or follow-up inspections that may be needed before you can schedule your moving day.
Learn More About VA, FHA, Or USDA One-Time Close / Single-Close Construction Loans Today
We have done extensive research on FHA, VA and USDA 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.
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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 so, 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.