Is Building A Home Right For You?

Should you build a home or buy existing construction? This isn’t a dilemma for those who have decided not to buy an existing home, but some borrowers only look at dollar signs (at first) when comparing their build-or-buy options. 

The reality is that some borrowers aspire to build new homes but don’t have the financial resources to commit to the project, whereas others may have no problem coming up with a down payment and closing costs, but aren’t sure whether the extra money required to build is worth it.

Should You Build A Home With A One-Time Close Construction Loan?

Borrowers who won’t need down payment assistance, have FICO scores in the mid-600s or better, and who own land or plan to buy land in conjunction with the loan may be the best candidates for a One-Time Close Construction Loan.

Choosing to build instead of buying means you select the floor plans, the quality of the features and appliances installed, color schemes, and options to install energy-saving features like solar energy systems. 

Those who build get more input over the final look and feel of the house than when buying an existing construction home. If this seems well worth the extra money, you may be a good candidate for a construction loan.

Financial Goals, Financial Needs

Borrowers who may have trouble saving up for a down payment may not be right for a construction loan, but may be well-suited for an existing construction home purchase instead. Why?

Because you can buy an existing home using a local down payment assistance program, and you can finance certain closing costs. You may also be able to negotiate with the home seller to have the seller provide up to six percent of the home's sale price for closing costs. You can’t do that with a new construction loan.

Lenders who offer One-Time Close Construction Loans under the VA and FHA Single Family Home Loan programs typically don’t permit down payment assistance. If this is a make-or-break for you, purchasing an existing home may be the best move.

And then there’s the loan term. Your total expenses over the lifetime of the mortgage may vary depending on whether or not you choose a 15-year or 30-year mortgage. 

If your goal is to save money over the entire loan, you’ll want to consider that 15-year option and whether you can realistically afford it, whether building or buying.

Want More Information About One-Time Close Loans?

We have extensively researched the FHA (Federal Housing Administration) and the VA (Department of Veterans Affairs) 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 with 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. 

OneTimeClose.com provides information and connects consumers to qualified One-Time Close lenders 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 and VA One-Time Close Construction Program only allow 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. 

Contact Us:  Send Us Your Request – Spam Safe 

Please send your email request to [email protected], which authorizes OneTimeClose.com to share your personal information with one 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 is an eligible veteran, down payments as low as $0 may be available up to the maximum amount your debt-to-income ratio per VA will allow – there are no maximum loan amounts as per VA guidelines.

Most VA lenders will go up to $1,500,000 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.