Construction Loan Choices
August 30, 2024
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.
Construction loans differ significantly from existing construction mortgages. The unique nature of these loans includes some potential challenges borrowers must be prepared to handle. What choices do you need to make about construction loans during the planning stages? What about after the construction begins?
An important part of the loan planning process for One-Time Close loans has to do with risk management. As the borrower, your role in managing risks associated with a construction loan should include the following:
Financial Preparedness: Build a foundation that includes savings for your down payment, good credit scores, and, above all, cash reserves to handle unexpected costs during the project if needed.
Borrower Involvement: Stay engaged throughout the construction process, ask questions of your lender and contractors, and review all loan documentation carefully, especially the fine print.
Documentation: Keep meticulous records of all financial transactions, contracts, change orders, and ALL communication related to the project. Assume there may be problems and plan accordingly, even if you know and fully trust the parties involved.
What To Consider During Construction
Once the hammers start swinging, risk management takes a different form. Construction projects may cost more than the initial budget might suggest.
This is typically due to the unexpected. Unforeseen site conditions, material price increases, or changes in the project scope can drive up costs. What should you anticipate happening during the construction phase?
Weather conditions, labor shortages, permit delays, and supply chain complications may contribute to construction taking longer than expected.
Contractor Issues such as poor workmanship, financial issues, and lack of insurance or permitting can result in setbacks or losses.
Construction loans typically involve lender inspections. This is another area where things can and sometimes do go wrong. Why? Disagreements during these inspections can hold up the disbursement of funds. You may even experience construction delays.
How To Avoid Trouble On Your One-Time Close Residential Construction Loan
Careful planning and establishing a realistic budget is key. That budget should include money for a contingency fund to handle the unexpected costs and other issues described above.
Work closely with your builder to develop the right expectations on project scope, timeline, and potential risks. All borrowers should research local contractors. You want one with a proven track record.
Compare and review your options by checking references and licenses. Verify that the contractors have the required insurance. You’ll also want to create a backup plan in case of construction delays or contractor issues.
Knowing the risks, taking proactive steps to mitigate them, and maintaining open communication with all parties involved increase the chances of a successful construction project.
An important part of the loan planning process for One-Time Close loans has to do with risk management. As the borrower, your role in managing risks associated with a construction loan should include the following:
Financial Preparedness: Build a foundation that includes savings for your down payment, good credit scores, and, above all, cash reserves to handle unexpected costs during the project if needed.
Borrower Involvement: Stay engaged throughout the construction process, ask questions of your lender and contractors, and review all loan documentation carefully, especially the fine print.
Documentation: Keep meticulous records of all financial transactions, contracts, change orders, and ALL communication related to the project. Assume there may be problems and plan accordingly, even if you know and fully trust the parties involved.
What To Consider During Construction
Once the hammers start swinging, risk management takes a different form. Construction projects may cost more than the initial budget might suggest.
This is typically due to the unexpected. Unforeseen site conditions, material price increases, or changes in the project scope can drive up costs. What should you anticipate happening during the construction phase?
Weather conditions, labor shortages, permit delays, and supply chain complications may contribute to construction taking longer than expected.
Contractor Issues such as poor workmanship, financial issues, and lack of insurance or permitting can result in setbacks or losses.
Construction loans typically involve lender inspections. This is another area where things can and sometimes do go wrong. Why? Disagreements during these inspections can hold up the disbursement of funds. You may even experience construction delays.
How To Avoid Trouble On Your One-Time Close Residential Construction Loan
Careful planning and establishing a realistic budget is key. That budget should include money for a contingency fund to handle the unexpected costs and other issues described above.
Work closely with your builder to develop the right expectations on project scope, timeline, and potential risks. All borrowers should research local contractors. You want one with a proven track record.
Compare and review your options by checking references and licenses. Verify that the contractors have the required insurance. You’ll also want to create a backup plan in case of construction delays or contractor issues.
Knowing the risks, taking proactive steps to mitigate them, and maintaining open communication with all parties involved increase the chances of a successful construction project.
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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Articles, Updates, and Guidelines
FHA Update New Construction Inspection Rules
October 12, 2024In 2020, the FHA and HUD announced pending changes to the FHA Single-Family Home Loan Lender's Handbook, HUD 4000.1. This was due to policy alterations in 2018 and 2019 which required the FHA and HUD to overhaul portions of HUD 4000.1 to accommodate the modified rules.
Build On Your Lot in Texas with an FHA or VA Construction Loan
October 10, 2024Texas residents are finding out that they can utilize these low One-Time Close down payment programs in order to build a new home with the same underwriting guidelines and qualifications as if they were purchasing a resale. Now may be the time to start looking into building a home that suits your exact needs. Learn more about the One-Time Close construction mortgage.
Using Escrow For Your Construction Loan
October 7, 2024If you have started talking to construction lenders, escrow is likely a term you have encountered in your discussions. However, some aren't sure what escrow is or why it is necessary. Escrow is basically an account used in conjunction with an agreement between you and the lender.
