How Much Should I Save For My Construction Loan As A First-Time Buyer?
June 12, 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.
Are you considering building from the ground up using a One-Time Close mortgage? Knowing which costs to anticipate and how much to expect to pay at closing time are key factors in a successful single-close residential real estate construction loan.
What does a first-time borrower need to know about these costs when still planning and saving for the OTC loan? We review some key issues below. It pays to start saving as early as possible for your home loan, so once you commit to being a first time home buyer, it is a good idea to start saving right away.
How Much To Save For?
Depending on the loan, your construction loan down payment may be 3.5% or as high as 20%. FHA single-close loans typically require 3.5% down but the borrower who chooses to pay 10% or more may qualify to eliminate their mortgage insurance after 11 years. Discuss this option with your loan officer.
Construction loans are more expensive than existing construction mortgages and more complex. They aren’t right for all borrowers--those who struggle to come up with a down payment may not be right for this type of loan.
If you come to the loan process with down payment funds ready to go, be sure to have the down payment funds in your account for a minimum time (at least 60 days in typical cases) before using it for your money down on the home loan.
In some cases this may not be possible and if that’s true for you, talk to your lender about options for those funds. They may include having you write a “gift letter” to explain the sources of your down payment.
Closing Costs
You should also anticipate closing costs, such as the lender fee, home inspection fees, appraisal and title searches, credit agency costs and related expenses. Sometimes closing costs can run higher, as much as five percent of the loan amount.
Saving early can help. Some borrowers struggle to come up with both the down payment and closing costs together. Remember that with a construction loan your lender may not be inclined to accept down payment assistance program funds. If you need to rely on these to make your down payment, a construction loan may not be right for you.
Building On Your Own Land
It’s cheaper to build on land you already own but not everyone has the ability to do that. Building your dream home may require you to also pay for the land it will be situated upon. Talk to a participating OTC lender about this option and how much it will add to your home loan amount.
Buying land in conjunction with these loans is more common than some realize but the added expense must be factored in. See if you qualify for an FHA or VA One-Time Close construction loan.
What does a first-time borrower need to know about these costs when still planning and saving for the OTC loan? We review some key issues below. It pays to start saving as early as possible for your home loan, so once you commit to being a first time home buyer, it is a good idea to start saving right away.
How Much To Save For?
Depending on the loan, your construction loan down payment may be 3.5% or as high as 20%. FHA single-close loans typically require 3.5% down but the borrower who chooses to pay 10% or more may qualify to eliminate their mortgage insurance after 11 years. Discuss this option with your loan officer.
Construction loans are more expensive than existing construction mortgages and more complex. They aren’t right for all borrowers--those who struggle to come up with a down payment may not be right for this type of loan.
If you come to the loan process with down payment funds ready to go, be sure to have the down payment funds in your account for a minimum time (at least 60 days in typical cases) before using it for your money down on the home loan.
In some cases this may not be possible and if that’s true for you, talk to your lender about options for those funds. They may include having you write a “gift letter” to explain the sources of your down payment.
Closing Costs
You should also anticipate closing costs, such as the lender fee, home inspection fees, appraisal and title searches, credit agency costs and related expenses. Sometimes closing costs can run higher, as much as five percent of the loan amount.
Saving early can help. Some borrowers struggle to come up with both the down payment and closing costs together. Remember that with a construction loan your lender may not be inclined to accept down payment assistance program funds. If you need to rely on these to make your down payment, a construction loan may not be right for you.
Building On Your Own Land
It’s cheaper to build on land you already own but not everyone has the ability to do that. Building your dream home may require you to also pay for the land it will be situated upon. Talk to a participating OTC lender about this option and how much it will add to your home loan amount.
Buying land in conjunction with these loans is more common than some realize but the added expense must be factored in. See if you qualify for an FHA or VA One-Time Close construction loan.
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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