One-Time Close Loans | FHA and VA Construction Loans
VA and FHA One-Time Close Construction Loans

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VA Loan - One-Time Close Construction Loan
FHA Loan - One-Time Close Construction Loan

Construction Loan Interest Rates

Construction Loan Interest Rates
Interest rates in general can be confusing at first. But there are some general truths--and some fiction--about home loan interest rates you should know. If you want to apply for a construction loan, knowing a few facts about how home loan interest rates work will go a long way toward helping you plan your loan.

FHA And VA One-Time Close Construction Loan Interest Rates: Not Set By The Government For Your Specific Loan

Yes, we know the Federal Open Market Committee is responsible for determining U.S. interest rates. That’s not what we mean when we say the government does not set the rates.

What we mean in this context is that the government agencies that back loans like VA Construction Loans and FHA One-Time Close construction loans are not responsible for regulating the interest rates on the loans they guarantee.

Your participating lender will offer you an interest rate based on your FICO scores and other financial data such as your loan repayment history and debt ratio. The VA and FHA have nothing to do with setting the rates.

Two-Close Construction Mortgages Versus Single Close Mortgages

It is true that the interest rates on a two-close construction loan could be lower than the rate offered to you by a One-Time Close lender. But there’s an important home loan fact to consider with these mortgages: the risks of the two-close loan include not being able to qualify for the second loan once the construction phase is complete.

The higher interest on the single-close loan may seem like the more acceptable circumstance for many potential borrowers.

Adjustable Rate Mortgages (ARMs)

One important fact about an adjustable rate mortgage is that they are not all created the same. If you explore options for an ARM loan through the VA or FHA you will notice that adjustable rate mortgages under those programs have specific limitations on how much the rate can be adjusted, how often, and there is typically a cap on how much the rates can change. 

But do NOT assume those terms and conditions apply to conventional ARM loans. Your experience will definitely vary between conventional and government-backed mortgages.

And if you are applying for a construction loan you will want to ask the lender about the adjustment rules for the construction phase of the loan. How often can the rate be adjusted and what are the rules? 

Home Loan Interest Rates: Not All Loans Can Be ARM Loans

If you apply for a construction loan, you are typically not permitted (by the lender) to get an adjustable rate loan to serve as the mortgage for your home. The loan money to build the house may be subject to an adjustable rate but your loan officer is not likely to approve an ARM for both construction and the mortgage. You will typically be offered a fixed rate for the mortgage loan.

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 with 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. 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 allow 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: Kit Homes, Barndominiums, Log Cabin Homes, Shipping Container Homes, Stilt Homes, Solar (only) or Wind Powered (only) Homes.

Contact Us:  Send Us Your Request – Spam Safe

Please send your email request to [email protected] which authorizes to share your personal information with one mortgage lender licensed in your area to contact you.

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 is an eligible veteran, 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
OTC articles
Construction Loan Terms To Remember Before You Start

There are many industry terms unfamiliar to first-time home buyers, especially those looking for a One-Time Close construction loan. Knowing some of these terms in advance can help you make better decisions in the planning stages of your single-close loan. We examine some important construction loan terms below to help you better navigate the process.

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There are a lot of myths about home loans in general and a few pervasive ones about construction loans worth dispelling. What do you need to know when you commit to building your own home from the ground up?

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If you want to build your own home, it’s good to know that doing so means taking some extra time to work on your credit and employment history before applying. Construction loans are harder to qualify for with income and employment for some, what do you need to know before you start the process? We examine some key points.

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