August 4, 2020

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Building A Home As A New Borrower

Construction Loans For First-Time Home Buyers

At press time, many portions of the United States are considering some kind of return to business as usual in the wake of lockdowns and coronavirus containment measures. 

For better or worse, some portions of the country are opening more than others and this will likely include real estate markets and house hunting as progress is made. And that means some first-time home buyers will be exploring their options soon.

Did you know that even as a first time borrower, you may be eligible for a One-Time Close construction loan that allows the borrower to build a home on their own lot rather than buying someone else’s property?

One-Time close loans are available for VA borrowers, FHA loan applicants, even USDA borrowers. These loans do require some additional legwork and documentation, but for those more interested in building a house than buying existing construction the effort is well worth it.

What do you need to keep in mind about building a home with a One-Time Close loan?

FICO score requirements from your chosen lender may be a bit higher than you might be held to for an existing construction purchase. That’s not an insurmountable issue but it does mean you will need to monitor your credit and keep your scores within the lender’s requirements.

For some loans such as VA construction loans there is no VA-required down payment in most cases. For FHA construction loans, the down payment remains the same for qualified borrowers–the minimum down is 3.5% for an FHA One-Time Close mortgage.

Some borrowers will, on the heels of tough financial times, feel the need to reduce out-of-pocket costs on the loan up front. If that situation describes you, it’s crucial to have a talk with your loan officer about the realities of construction loans including the importance of hiring the right builder for the job.

A contractor who doesn’t have experience doing the scale of work you want may come cheaper, but will they cost more in the long run? Good things to ask ahead of your loan.

Don’t be in a rush with a construction loan; the permitting process alone can take more time than you expect, especially in competitive housing markets where there may be longer processing times due to volume.

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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