One-Time Close Loans | FHA and VA Construction Loans
VA and FHA One-Time Close Construction Loans

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VA Loan - One-Time Close Construction Loan
FHA Loan - One-Time Close Construction Loan

Can I Use A Construction Loan To Build An Accessory Dwelling Unit?

Can I Use A Construction Loan To Build An Accessory Dwelling Unit?
In 2023, the Fed’s inflation reduction strategy made any kind of financing more expensive, including mortgages.

This made some consider not building or buying until conditions improve, and others simply placed their long-term plans for larger homes on hold as a result of higher interest rates. In the same year, there was a growing trend involving accessory dwelling units or ADUs.

ADUs are living units the owner adds to an existing home, whether through their own labor or by hiring a contractor. These additions can include mother-in-law apartments, garages, studio spaces, and more.

ADU projects can add value to an existing property. They can also help a homeowner grow into a property rather than out of it.

But accessory dwelling unit projects may or may not typically fall into One-Time Close construction loan options depending on the lender.

An ADU project features considerations not found in a single-close construction loan. For an ADU, depending on the project, the loan size may not be the same. It depends on the scope of the work needed, but don't expect a full mortgage amount to complete an accessory dwelling unit.

Is it possible to find a lender willing to offer a One-Time Close loan to build an ADU? You may be provided other options. A construction loan might not be the best fit. Should you consider a renovation loan, home equity line of credit, or FHA cash out refinancing instead?

One-Time Close mortgages are specifically for creating a new dwelling. They typically don't add on to an existing property. Consider the definition of a single-close mortgage as found on the front page of our official site:

“The One-Time Close Loan is a mortgage program that finances the construction, lot purchase, and permanent loan of a new home, all wrapped up in a single mortgage with a single closing.”

A One-Time Close loan is for a “new" home. It doesn't address building an addition to an existing structure. Do you want to build on land with no existing property? You can if you are approved for a One-Time Close loan. The same is true in cases where you buy a plot of land to build on in conjunction with the One-Time Close mortgage.

If existing structures on the property need to be torn down, you’ll need to discuss that option with the lender (where financing is concerned). But if you need to add to those existing structures, you should expect a loan officer to recommend an alternative.

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 who know the product well and consistently provide 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 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 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.
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