December 1, 2020

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The One-Time Close Construction Loan: An Option In 2020

The FHA One-Time Close Construction Loan: An Option In 2020

FHA home loan options in 2020 don’t have to be limited to getting a home loan to purchase existing construction property; there is a way to apply for an FHA mortgage that lets you have a home built to suit from the ground up on your own land.

These construction home loans, known as One-Time Close construction loans, are offered by the FHA, the VA, and even the USDA and can help even a first-time homebuyer get a house built to their specifications with a low down payment.

Yes. you read that correctly. First-time home buyers are permitted to apply for the One Time Close construction loan. So are experienced homeowners.

One-Time Close construction loans are good for borrowers who want a home that meets their standards, but the loan is best for those who are able to take additional time to get into their new home. The trade-off for having just the right property built for you is the time it will take from planning to move-in.

FHA Construction Loans: Worth The Effort

The loan approval process and the construction itself will take time–likely more time than you could wait when you buy an existing house.

But these One-Time Close loans offer more flexibility in areas such as floor plans, the types of appliances you wish to furnish the home with, garage design where appropriate, and much more. That flexibility is worth the investment for many borrowers.

Construction Loans: Certain Restrictions May Apply

Yes, these loans can feature certain restrictions, but not all of them are FHA rules–some are lender requirements. For example, your participating lender may not let a borrower act as her own contractor, and some lenders don’t approve construction loans for multi-unit properties.

It’s best to discuss such rules with a loan officer before you commit to the project so that you know the parameters and can work accordingly.

Obtaining Permits May Add Time To Your Projects

Some high-cost housing markets feature longer-than-usual waiting times to get permits approved. Ask your lender about this process and how much extra time you may need to build into your home loan to accommodate the length of time it takes to get the appropriate city or state paperwork.

Want More Information About One-Time Close Loans?

One-Time Close Loans are available for FHA, VA and USDA Mortgages.  These loans also go by the following names: 1 X Close, Single-Close Loan or OTC Loan.

We have done extensive research on the FHA (Federal Housing Administration), the VA (Department of Veterans Affairs) and the USDA (United States Department of Agriculture) One-Time Close Construction loan programs. We have spoken directly to licensed lenders that originate these residential loan types in most states and each company has supplied us the guidelines for their products. We can connect you with mortgage loan officers who work for lenders that know the product well and have consistently provided quality service. If you are interested in being contacted by a licensed lender in your area, please send responses to the questions below. All information is treated confidentially. provides information and connects consumers to qualified One-Time Close lenders in an effort to raise awareness about this loan product and to help consumers receive higher quality service. We are not paid for endorsing or recommending the lenders or loan originators and do not otherwise benefit from doing so. Consumers should shop for mortgage services and compare their options before agreeing to proceed.

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 multi-family units (no duplexes, triplexes or fourplexes). In addition, the following homes/building styles are not allowed under these programs:  Kit Homes, Barndominiums, Log Cabin Homes, Shipping Container Homes, Stilt Homes, Solar (only) or Wind Powered (only) Homes.

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

  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 and/or the Co-borrower’s credit profile: Excellent – (680+), Good – (640-679), Fair – (620-639) or Poor- (Below 620). 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, down payments as low as $0 may be available up to the maximum amount your debt-to-income ratio VA will allow – there are no maximum loan amounts as per VA guidelines.  Most lenders will go up to $750,000 and review higher loan amounts on a case by case basis.   If not, the FHA down payment is 3.5% up to the maximum FHA lending limit for your county.

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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