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 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 email@example.com 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.