Building a Home FAQ
February 20, 2025
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.
Imagine you’re building a house. Traditionally, you'd get one loan for the construction, then another to buy the finished house. An One-Time Close construction loan (also known as an OTC mortgage) simplifies this. It's a single loan that covers both the construction and the final mortgage. You close just once, hence the name. Government programs like FHA, VA, and USDA offer these.
Q: How do these government-backed OTC loans differ from each other?
A: Each program is designed for different people:
FHA OTC helps borrowers with moderate incomes. It's known for lower down payments and easier credit requirements.
VA OTC is for veterans and active military. It often offers 100% financing, meaning no down payment for qualified borrowers, and has good interest rates.
USDA OTC supports people building in rural areas, also offering 100% financing in eligible zones.
Q: What's the biggest time difference between building with an OTC loan and buying a pre-existing house?
A: Time is the main thing. Buying an existing home usually takes a month or two. Building with an OTC loan? Expect six months to a year, or even longer.
Q: Walk me through buying a pre-existing house, time-wise.
A: First, you get pre-approved by a lender, which takes a few days. Then you look for a house and make an offer, which can take a few weeks. After that, inspections and appraisals happen, another couple of weeks. Finally, the loan gets processed, and you close on the house.
Q: What about building with an OTC loan? How does that timeline look?
A: You start by getting pre-qualified and finding a builder, which takes a month or two. Then the lender approves your loan and plans, another month or two. Construction itself takes the longest, several months. Inspections and a final appraisal come next, a couple of weeks. Then, you close on the final mortgage.
Q: Why does building take so much longer?
A: Many things slow it down. Finding the right builder and agreeing on a contract takes time. Getting permits from the city or county can drag on. Weather, material shortages, and labor issues can cause delays. You’ll have inspections throughout construction, and the lender has to approve payments. Appraisals for new construction are more involved. Plus, lenders thoroughly check out the builder and the plans.
Q: What are the upsides of an OTC loan?
A: It simplifies the whole financing process. You can lock in a good interest rate early on. You get to customize your home exactly how you want it.
Q: What are the downsides?
A: The long timeline is an important consideration. It's a more complex process with lots of paperwork. Finding a good builder is crucial. You might face unexpected delays or costs. And lenders have strict requirements.
Q: How can I keep things moving if I'm building?
A: Choose a builder with a solid reputation. Get documents in quickly. Check on the site regularly. Budget for surprises and delays, they are sure to come.
Q: So, should I build or buy?
A: It depends on you. If you want a custom home and have the patience, building can be great. If you need to move fast, buying a pre-existing house is better. Either way, good planning is key.
Q: How do these government-backed OTC loans differ from each other?
A: Each program is designed for different people:
FHA OTC helps borrowers with moderate incomes. It's known for lower down payments and easier credit requirements.
VA OTC is for veterans and active military. It often offers 100% financing, meaning no down payment for qualified borrowers, and has good interest rates.
USDA OTC supports people building in rural areas, also offering 100% financing in eligible zones.
Q: What's the biggest time difference between building with an OTC loan and buying a pre-existing house?
A: Time is the main thing. Buying an existing home usually takes a month or two. Building with an OTC loan? Expect six months to a year, or even longer.
Q: Walk me through buying a pre-existing house, time-wise.
A: First, you get pre-approved by a lender, which takes a few days. Then you look for a house and make an offer, which can take a few weeks. After that, inspections and appraisals happen, another couple of weeks. Finally, the loan gets processed, and you close on the house.
Q: What about building with an OTC loan? How does that timeline look?
A: You start by getting pre-qualified and finding a builder, which takes a month or two. Then the lender approves your loan and plans, another month or two. Construction itself takes the longest, several months. Inspections and a final appraisal come next, a couple of weeks. Then, you close on the final mortgage.
Q: Why does building take so much longer?
A: Many things slow it down. Finding the right builder and agreeing on a contract takes time. Getting permits from the city or county can drag on. Weather, material shortages, and labor issues can cause delays. You’ll have inspections throughout construction, and the lender has to approve payments. Appraisals for new construction are more involved. Plus, lenders thoroughly check out the builder and the plans.
Q: What are the upsides of an OTC loan?
A: It simplifies the whole financing process. You can lock in a good interest rate early on. You get to customize your home exactly how you want it.
Q: What are the downsides?
A: The long timeline is an important consideration. It's a more complex process with lots of paperwork. Finding a good builder is crucial. You might face unexpected delays or costs. And lenders have strict requirements.
Q: How can I keep things moving if I'm building?
A: Choose a builder with a solid reputation. Get documents in quickly. Check on the site regularly. Budget for surprises and delays, they are sure to come.
Q: So, should I build or buy?
A: It depends on you. If you want a custom home and have the patience, building can be great. If you need to move fast, buying a pre-existing house is better. Either way, good planning is key.
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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