January 17, 2021

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One-Time Close Mortgage Loans: Which Is Right For You?

One Time Close Mortgage Loans: The Base Home Sales Price

A One-Time Construction loan provides a single loan for building a home from the ground up. You don’t have a construction phase loan and a mortgage loan to apply for separately when you use a One-Time Close mortgage.

There are VA One-Time Close construction loans, FHA One-Time Close mortgages, and USDA versions of the same loan. Which one is right for you?

USDA construction loans are need-based loans; household income limits and other requirements apply.

Some borrowers will need a USDA loan while others may not qualify because the earn too much per household or because of other applicable factors.

VA mortgages in general are a huge advantage–and the VA One-Time Close mortgage is no exception–because eligible and qualified borrowers are able to apply for this loan with no down payment requirement.

VA construction loans are great for military retirees, officers with more disposable income, senior enlisted or mid-career NCOs, and with junior enlisted who qualify financially. What stops more people from applying for the VA One-Time Close construction loan option with zero down payment?

It’s simple, really–VA mortgages aren’t available to the general public; they are for those with qualifying military service and some surviving spouses of servicemembers who have died.

But for those who do have access to the VA home loan program a construction loan featuring no money down AND no VA-mandated mortgage insurance requirement and you have a very powerful loan option indeed.

FHA One-Time Close mortgages feature neither need-based restrictions such as income caps or a military service requirement.

If you meet the FHA’s comparatively forgiving credit requirements (don’t forget the lender has credit standards, too) you can qualify for a low 3.5% down payment on the mortgage, and get the option to finance certain closing costs.

Which construction loan is best for you? Much depends on your financial needs, goals, and your ability to get approved based on your FICO scores and loan repayment history. Many reading this will realize they are best suited for an FHA One-Time Close loan but others may select the VA or USDA option.

No matter which verison you ultimately choose, you’ll need the help of a participating lender for the VA, FHA, or USDA options–all three of these are government-backed mortgages and not all lenders choose to participate.

If you need to find a lender, be sure to shop around as not all financial institutions offer the same terms, conditions, or perks for borrowers interested in building rather than buying.

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.

FHANewsblog.com 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 onetimeclose@fhanewsblog.com authorizes FHAnewsblog.com 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 veterans, 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 FHANewsBlog.com
FHANewsBlog.com 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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