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

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The Importance Of Your Budget To Build A New Home

The Importance Of Your Budget To Build A New Home
Do you want to build a home from the ground up using a One-Time Close construction loan?

Those who invest in construction or renovation projects know some simple guidelines about planning the budget. If you are new to this type of home loan, you'll want to budget like the pros and there are some simple ways to do that as we examine below.

Save Up For The Unexpected

Something called a contingency reserve is an important part of any construction loan budget. This is a specific amount of money set aside for the project to cover “unforeseen repairs or deficiencies that are discovered during the renovation" according to Fannie Mae.

Fannie Mae says the contingency reserve will be a percentage of the total cost of the project. 10% may be a good starting point for planning.

Be Realistic About The Project

When budgeting for a One-Time Close construction project, you won’t be able to rely on the bare minimum amount of cash to get by. You will need to plan ahead to anticipate additional expenses.

Construction projects typically won't come in under budget and ahead of schedule. You should expect delays and a certain amount of cost overruns depending on the circumstances.

These can happen in the form of delays caused by natural disasters or bad weather, supply problems, or difficulty with certain permits. Did supply chain woes force you to choose alternative materials to build with that cost more? Did a portion of the project take longer than you had expected?

Those are just two of the issues you should plan for.

A failure to anticipate basic problems like these or creating a construction loan budget with no contingency reserve and you will likely be disappointed with the end result.

Don't Lowball Your Own Budget

Smart planning for a construction loan means being realistic about listing all necessary expenses, including those that some assume may not be required.

But what you don't know could hurt you later, so it pays to do some serious research about the process.

For example, DO NOT purchase a house without paying for the "optional" home inspection. Skipping the home inspection or letting an appraisal stand in for the inspection is a terrible idea.

There is no way you can otherwise know about a possible defect or bad construction in the newly built home. You need an independent third party to review the work.

You may also need to include pest control services and other options, such as flood zone determination, in your budget. Don't assume these costs won't creep into your budget at some point; it's better to anticipate them.

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 would like to be contacted by a licensed lender in your area, please respond 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.

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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