May 11, 2021

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Monitoring Your Credit Ahead Of Your Rehab Loan Or One-Time Close Loan

Don't Make These Mistakes With Your One-Time Close Construction Loan

Credit monitoring is important for any consumer but borrowers interested in building a home on their own lot using a One-Time Close (OTC) construction loan or even an FHA 203(k) Rehab loan should give serious thought about investing in credit monitoring as early as possible in the planning stages.

This can be a big advantage for those seeking rehab or construction loans; participating FHA lenders may require higher FICO scores for construction loans and you’ll want every advantage in that department including knowing the contents of your credit report and the changes to it as they happen.

FHA Rehab Loans allow borrowers to buy fixer-upper loans and have work done to bring them up to code and FHA standards; FHA One-Time Close (OTC) mortgage loans allow borrowers to build a home from the ground up on their own land or on land purchased in conjunction with the construction loan.

OTC loans can be more complicated than FHA mortgages and lenders may look for higher credit scores for their construction loans.

And that’s why credit monitoring as early as possible can help. You’ll be able to address any existing credit issues on your report (disputed entries, outdated entries, evidence of identity theft, errors) and watch any changes to your report and adjust your habits accordingly.

Those who monitor their credit reports learn that hard inquiries into their credit can lower their scores which is one reason why you should avoid new credit applications ahead of your mortgage loan.

Keep in mind that your credit report may be constantly updated, and if you don’t monitor your report you could find nasty surprises later that need dealing with. How much time is lost by people who didn’t know certain changes on their report showed up when they weren’t looking? Active credit monitoring is the key to preventing this.

Even a case of outdated information that needs to “fall off” your credit report could take longer than you realize to settle with the credit reporting agencies and that’s a good reason to start looking at your credit early.

Monitoring your credit is informative, but the simple act of monitoring does not affect the other areas your lender will scrutinize you on; you’ll need to reduce your debt-to-income ratio and make all payments on time for at least 12 months ahead of the loan application.

You will also need to anticipate your closing costs and down payment; participating lenders are likely to not allow you to use down payment assistance programs in conjunction with an FHA One-Time Close loan or a VA OTC mortgage.

Construction loans are more rigorous in some ways than loans to buy existing construction. It takes time to approve the plans for the home, find the right contractors, and the construction process itself can be time-consuming. But the rewards are worth it–borrowers get to approve the design for their new home and don’t have to rely on the existing construction options that might not be exactly what the borrower wants.

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 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 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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