What to Know About OTC Loan Delays and Their Cost
May 21, 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.
A One-Time Close (OTC) residential construction loan is a specialized financing product that combines the financing for a new home's construction phase and the permanent mortgage into a single loan with just one closing.
Unlike other methods that require separate loans for building and then for long-term ownership, the OTC loan streamlines the entire process, offering a simplified and often more cost-effective approach to building a custom home than two-close construction loans.
What are the main benefits of a One-Time Close Loan?
They include having a single application and a single closing, which saves time, reduces administrative burdens, and often lowers overall closing costs compared to obtaining two separate loans. Government backed OTC loans such as the FHA single close construction loan, offer advantages such as lower down payment requirements (as little as 3.5% for FHA), ands more flexible credit score criteria.
What kinds of delays can impact a home construction project?
Construction projects are susceptible to various delays. Common culprits include adverse weather conditions like prolonged rain, extreme temperatures, or storms that halt work. Material shortages or supply chain disruptions can delay the delivery of essential building components.
Labor shortages can slow progress. Delays in obtaining necessary permits or delays associated with waiting for municipal inspections, are common.
Scheduling conflicts or unforeseen complexities in the build, can also cause setbacks. Lastly, homeowner-initiated changes or "change orders" after construction has begun are a common source of delays.
How can construction delays indirectly increase my overall homebuilding costs?
Delays can lead to several indirect cost increases. You may incur increased temporary housing costs if you're renting or have sold your previous home, as you'll need to extend your temporary living arrangements, including rent, utilities, and potentially storage fees.
Furthermore, severe or prolonged delays can lead to increased material and labor costs that exceed your contingency fund. If prices for materials or labor unexpectedly rise during the extended timeline and go beyond the contingency built into your loan, you might be responsible for covering these additional expenses out of pocket. In rare, extreme cases of very long delays, a lender might require a re-appraisal to confirm the property's value.
How can I minimize the financial burden of construction delays?
Preventive medicine is best. Choose a builder with a reputation for projects coming in on time and on budget. Review your construction contract. Make sure it clearly outlines timelines, contingency plans, and responsibilities for delays.
Include a contingency reserve, which should be 5-10% of the total cost to cover unexpected expenses. Keep open communication with your builder and your lender. Stay informed about progress and potential issues.
Read your loan documents thoroughly, especially clauses related to construction timelines and extensions. Be wary of change orders after construction has begun, as these are a frequent cause of delays and cost overruns.
Unlike other methods that require separate loans for building and then for long-term ownership, the OTC loan streamlines the entire process, offering a simplified and often more cost-effective approach to building a custom home than two-close construction loans.
What are the main benefits of a One-Time Close Loan?
They include having a single application and a single closing, which saves time, reduces administrative burdens, and often lowers overall closing costs compared to obtaining two separate loans. Government backed OTC loans such as the FHA single close construction loan, offer advantages such as lower down payment requirements (as little as 3.5% for FHA), ands more flexible credit score criteria.
What kinds of delays can impact a home construction project?
Construction projects are susceptible to various delays. Common culprits include adverse weather conditions like prolonged rain, extreme temperatures, or storms that halt work. Material shortages or supply chain disruptions can delay the delivery of essential building components.
Labor shortages can slow progress. Delays in obtaining necessary permits or delays associated with waiting for municipal inspections, are common.
Scheduling conflicts or unforeseen complexities in the build, can also cause setbacks. Lastly, homeowner-initiated changes or "change orders" after construction has begun are a common source of delays.
How can construction delays indirectly increase my overall homebuilding costs?
Delays can lead to several indirect cost increases. You may incur increased temporary housing costs if you're renting or have sold your previous home, as you'll need to extend your temporary living arrangements, including rent, utilities, and potentially storage fees.
Furthermore, severe or prolonged delays can lead to increased material and labor costs that exceed your contingency fund. If prices for materials or labor unexpectedly rise during the extended timeline and go beyond the contingency built into your loan, you might be responsible for covering these additional expenses out of pocket. In rare, extreme cases of very long delays, a lender might require a re-appraisal to confirm the property's value.
How can I minimize the financial burden of construction delays?
Preventive medicine is best. Choose a builder with a reputation for projects coming in on time and on budget. Review your construction contract. Make sure it clearly outlines timelines, contingency plans, and responsibilities for delays.
Include a contingency reserve, which should be 5-10% of the total cost to cover unexpected expenses. Keep open communication with your builder and your lender. Stay informed about progress and potential issues.
Read your loan documents thoroughly, especially clauses related to construction timelines and extensions. Be wary of change orders after construction has begun, as these are a frequent cause of delays and cost overruns.
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
How To Credit Qualify For An FHA Construction Loan Or A VA Construction Loan
February 7, 2023If you are looking to finance the construction of your new home, you may be wondering if you can qualify for a VA or FHA One-Time Close construction loan. In this article, we will go over the four things you need to credit qualify for one of these loans. Remember, VA loans are not offered to all applicants but only to those with qualifying military or uniformed service. FHA loans are offered to all who qualify for the loan.
Before You Build, Check Your Credit
February 2, 2023If you are building a home in 2023 with a One-Time Close mortgage, you likely understand that these loans have higher credit standards than existing construction mortgages. Sometimes you need every advantage you can get to qualify for a more complex loan like a single close construction mortgage, and paying attention to the credit issues below can help.
Construction Loan Market Outlook Improving In 2023
January 26, 2023Finance blogs are reporting interest rates falling more than three-quarters of a point since the end of October 2022, with more improvements possible down the road. Now is a very good time to consider your construction loan options, though with the caveat that we may experience a bumpy road back to lower rates and less of a seller's market for real estate overall.
