How One-Time Close Loans Differ From Existing Construction Loans
February 9, 2022
FHA, VA, and USDA: One-Time Close Loans
Want More Information About One-Time Close Loans?
We have done extensive research on 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 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 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, including but not limited to: Kit Homes, Barndominiums, Log Cabin Homes, Shipping Container Homes, Stilt Homes, Solar (only) or Wind Powered (only) Homes, Dome Homes, Bermed Earth Sheltered Homes, Tiny Homes, Accessory Dwelling Units, or A-Framed Homes.
All known FHA/VA One-Time Close Lenders known to our company will not allow a borrower to act as their own contractor, whatsoever. There cannot be self-builds, relative builds, or employer builds.
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. No SSN required • No credit check • 100% free to get started
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 per VA will allow – there are no maximum loan amounts as per VA guidelines. Most 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.
The FHA One-Time Close construction loan, the VA equivalent of it, USDA construction loans, and even conventional construction mortgages all have features that make them different than existing construction loans.
How do they differ? You may not be ready to commit to a mortgage at the time you read this, but if you ARE reading this you are likely making plans, comparing prices, and thinking about what it takes to save up for the down payment.
Construction loans are great for those who want a home more customized (or customizable at a later date) than existing properties. What do you need to know about them?
One-Time Close Construction Loans Take More Time
And for many, that extra time is WORTH IT, Don’t be in a hurry to occupy the home you want to build with your loan; you need time to get the right floor plans, hire the right contractors, and get the job done. Permits take longer than you think they do depending on the housing market; don’t make the mistake of giving yourself an unreasonable timeline.
Construction Loans Are Available for First-Time Buyers
Yes, you CAN qualify for a construction loan to build on your own lot even as a first-time home buyer. Some lenders require slightly higher FICO scores for these mortgages. Be sure to ask a lender what you will need to qualify for a construction loan compared to an existing construction mortgage.
Construction Loans May Have Certain Limits Established by the Lender
We are not talking about loan limits here, but rather limits on the type of property you can build. Some financial institutions don’t approve construction loans for multi-unit housing, for example. You may also find that a construction loan such as an FHA or VA loan may not provide funds for luxury features like a swimming pool. Ask your loan officer.
Your Home Loan Payments Begin Later
Yes, your construction loan payments may start later than existing construction mortgage payments. If you apply for a 30-year loan in the last months of 2022, and the home is not completed until early 2023, your mortgage payments may begin then.
Does that sound good? It CAN be good for some, but remember that you are still required to fully pay off the loan within the 30 year loan term no matter when your payments actually begin.
Ask your lender how that will affect your monthly mortgage payment--will you pay more each month to make up for the months you were not paying because the construction was still underway? Or do you make a balloon payment at the end of the loan. Different types of home loan (conventional, VA, FHA, USDA) will have different rules in this area. Be sure to ask.
How do they differ? You may not be ready to commit to a mortgage at the time you read this, but if you ARE reading this you are likely making plans, comparing prices, and thinking about what it takes to save up for the down payment.
Construction loans are great for those who want a home more customized (or customizable at a later date) than existing properties. What do you need to know about them?
One-Time Close Construction Loans Take More Time
And for many, that extra time is WORTH IT, Don’t be in a hurry to occupy the home you want to build with your loan; you need time to get the right floor plans, hire the right contractors, and get the job done. Permits take longer than you think they do depending on the housing market; don’t make the mistake of giving yourself an unreasonable timeline.
Construction Loans Are Available for First-Time Buyers
Yes, you CAN qualify for a construction loan to build on your own lot even as a first-time home buyer. Some lenders require slightly higher FICO scores for these mortgages. Be sure to ask a lender what you will need to qualify for a construction loan compared to an existing construction mortgage.
Construction Loans May Have Certain Limits Established by the Lender
We are not talking about loan limits here, but rather limits on the type of property you can build. Some financial institutions don’t approve construction loans for multi-unit housing, for example. You may also find that a construction loan such as an FHA or VA loan may not provide funds for luxury features like a swimming pool. Ask your loan officer.
Your Home Loan Payments Begin Later
Yes, your construction loan payments may start later than existing construction mortgage payments. If you apply for a 30-year loan in the last months of 2022, and the home is not completed until early 2023, your mortgage payments may begin then.
Does that sound good? It CAN be good for some, but remember that you are still required to fully pay off the loan within the 30 year loan term no matter when your payments actually begin.
Ask your lender how that will affect your monthly mortgage payment--will you pay more each month to make up for the months you were not paying because the construction was still underway? Or do you make a balloon payment at the end of the loan. Different types of home loan (conventional, VA, FHA, USDA) will have different rules in this area. Be sure to ask.
FHA, VA, and USDA: One-Time Close LoansWant More Information About One-Time Close Loans?We have done extensive research on 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 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 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, including but not limited to: Kit Homes, Barndominiums, Log Cabin Homes, Shipping Container Homes, Stilt Homes, Solar (only) or Wind Powered (only) Homes, Dome Homes, Bermed Earth Sheltered Homes, Tiny Homes, Accessory Dwelling Units, or A-Framed Homes.
All known FHA/VA One-Time Close Lenders known to our company will not allow a borrower to act as their own contractor, whatsoever. There cannot be self-builds, relative builds, or employer builds.
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. No SSN required • No credit check • 100% free to get started
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 per VA will allow – there are no maximum loan amounts as per VA guidelines. Most 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.
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