There are reasons why some veterans don’t use their VA loan benefits to buy a house at that moment. The reasons for that, we’ll discuss below. But it is important for military members and their families to know the options they have when looking for a home to build on their own lot.
There are plenty of options; which type of One-Time Close construction loan to choose from? Those who have entitlement to use for a VA mortgage loan to build a home would seem to choose to do so based on the zero down home loan option all by itself.
Add the lack of a mortgage insurance requirement, and the fact that veterans who receive (or are eligible to receive) VA compensation for service-connected medical issues are exempt from having to pay the VA loan funding fee.
These perks make the VA version of a One-Time Close construction loan very enticing.
But there are some cases where a veteran might choose not to use VA loan entitlement to apply for the construction loan.
In some cases that’s because the entitlement is not available (used before and not restored). In other cases, the house hunter may wish to save using their VA loan entitlement for later.
A borrower who has purchased a home with a VA loan before would be required to fully pay off the mortgage loan in order to have full VA loan entitlement restored. That can be done by paying the loan off in cash or by selling the home and paying off the mortgage note.
The veteran could use partial VA home loan entitlement, or choose a different type of One-Time Close loan.
FHA One-Time Close construction loans can stand in for the VA version, but there are important differences including a required down payment for the FHA version of the loan. This down payment is mandatory, but it is low.
The FHA down payment requirement is 3.5% at the lowest. That is the same as for any other FHA home loan, including condo loans and mobile home loans.
Your actual down payment requirements will be influenced by your FICO scores; those who have scored below 580 must, according to FHA loan rules, make a down payment of 10%. Lender FICO score requirements will also apply and these may be more strict than the FHA minimum standards.
Learn More About FHA/ VA / 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 with 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 firstname.lastname@example.org 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).
- Send your first and last name, e-mail address, and contact telephone number to email@example.com
- 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 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.