One-Time Close Basics To Know Before You Commit
April 16, 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.
There are two popular ways to finance new home construction using a single loan: the FHA One-Time Close (OTC) loan and a similar Conventional single-close loan. What’s a single-close mortgage?
Think of it as an "all-in-one" loan for building a house. Instead of getting one loan for the construction phase and another separate mortgage loan once the home is finished, a single-close loan combines everything into one package. It covers land, materials, labor, permits, and builder fees. The big advantage?
One Application, One Approval
You apply for the loan once. The lender checks your credit and finances once. When finished, you get one appraisal based on what the house will be worth. You sign one set of loan papers at one closing. This all happens before any building begins.
During construction (which usually takes up to a year or so), the loan acts like a credit line for your builder. The lender releases money to the builder in stages (called "draws") as work gets done (like finishing the foundation or framing).
The lender usually sends someone to inspect the progress before releasing funds. During this time, you typically make smaller, interest-only payments based only on the money paid out so far.
Once the house is built and gets its final approval (like a Certificate of Occupancy), the loan automatically switches into your regular, long-term mortgage. You don't need another closing or approval process at this point (usually!). You then start making your standard monthly payments (principal and interest) based on the terms you agreed to at the very beginning, like a
30-year fixed rate.
Why This is Better Than Two Loans
The biggest plus is avoiding the hassle and cost of two separate loan processes. Two loans mean two applications, two approvals, two appraisals, and two closing costs (fees for title, recording, etc.). A single close cut eliminates those duplicated costs.
You lock in the interest rate for your final mortgage before construction even starts. You're protected if market rates go up while your house is being built (which can take months). Your rate is already set. With two loans, you'd have to take whatever the rates are when you apply for the second (permanent) loan after the build.
One loan, one lender means a more straightforward process to manage. The lender pays the builder through the draw system, which takes some burden off you. Builders often prefer this, too, because the funding is more secure.
Because you're approved for the final mortgage from day one, you don't have to worry about failing to qualify for it later. With two loans, if your financial situation changed during the build (like losing a job), you might not get approved for the permanent mortgage needed to pay off the construction loan. The single-close loan avoids this scary possibility.
The Old Way (Two Loans)
Just to compare, the traditional method involved getting a short-term loan just for construction. After the house was built, you had to apply again for a regular mortgage to pay off that construction loan. This meant double the paperwork, fees, and risk related to interest rates and qualifying.
The single-close loan shifts things around. You get rate security early but are committed to the project and lender from the start. The lender gets a long-term customer upfront but takes on more oversight during construction. For many, this process seems more complex than a one-time close alternative.
Think of it as an "all-in-one" loan for building a house. Instead of getting one loan for the construction phase and another separate mortgage loan once the home is finished, a single-close loan combines everything into one package. It covers land, materials, labor, permits, and builder fees. The big advantage?
One Application, One Approval
You apply for the loan once. The lender checks your credit and finances once. When finished, you get one appraisal based on what the house will be worth. You sign one set of loan papers at one closing. This all happens before any building begins.
During construction (which usually takes up to a year or so), the loan acts like a credit line for your builder. The lender releases money to the builder in stages (called "draws") as work gets done (like finishing the foundation or framing).
The lender usually sends someone to inspect the progress before releasing funds. During this time, you typically make smaller, interest-only payments based only on the money paid out so far.
Once the house is built and gets its final approval (like a Certificate of Occupancy), the loan automatically switches into your regular, long-term mortgage. You don't need another closing or approval process at this point (usually!). You then start making your standard monthly payments (principal and interest) based on the terms you agreed to at the very beginning, like a
30-year fixed rate.
Why This is Better Than Two Loans
The biggest plus is avoiding the hassle and cost of two separate loan processes. Two loans mean two applications, two approvals, two appraisals, and two closing costs (fees for title, recording, etc.). A single close cut eliminates those duplicated costs.
You lock in the interest rate for your final mortgage before construction even starts. You're protected if market rates go up while your house is being built (which can take months). Your rate is already set. With two loans, you'd have to take whatever the rates are when you apply for the second (permanent) loan after the build.
One loan, one lender means a more straightforward process to manage. The lender pays the builder through the draw system, which takes some burden off you. Builders often prefer this, too, because the funding is more secure.
Because you're approved for the final mortgage from day one, you don't have to worry about failing to qualify for it later. With two loans, if your financial situation changed during the build (like losing a job), you might not get approved for the permanent mortgage needed to pay off the construction loan. The single-close loan avoids this scary possibility.
The Old Way (Two Loans)
Just to compare, the traditional method involved getting a short-term loan just for construction. After the house was built, you had to apply again for a regular mortgage to pay off that construction loan. This meant double the paperwork, fees, and risk related to interest rates and qualifying.
The single-close loan shifts things around. You get rate security early but are committed to the project and lender from the start. The lender gets a long-term customer upfront but takes on more oversight during construction. For many, this process seems more complex than a one-time close alternative.
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
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