Building A House And Hiring Contractors
March 28, 2024
Interested in building a dream home with a One-Time Close construction loan? There are important issues to know about these projects, starting with the fact that you typically are not allowed to act as your own builder and must hire contractors to do the work.
Some borrowers must get used to thinking about this, but fortunately, some general guidelines can help them through the process.
The first thing to know is that you must use state-licensed contractors. Don’t bother wasting time considering a builder who is not recognized by your state, asks for compensation in cash, or offers you a “special deal” on “surplus” materials left over from another job.
Vetting A Construction Loan Contractor
Make sure the company is current on liability insurance. Be sure to request the contractor’s license number, then vet them using the appropriate state or local government agency and local reviews of their work
When in the bidding phase, do not get just one or two bids from your proposed contractors. In stead, try for a minimum of three bids and three eferences each.
Why You Should Never Pay For Any Services In Cash
Paying " alternatively” for supplies or services leaves you vulnerable. The contractor is free to do whatever quality of work they want once you enter an “off the books” arrangement and you won’t have any recourse if the work turns out to be substandard.
Also, beware of situations where you are asked to pay ahead of completed work. Why? Payments rendered before work is approved can become problematic later.
Your construction loan is designed to have payments from escrow to the supplier or contractor. Don’t deviate from that arrangement, especially if a contractor asks you to pay in cash for certain work.
Your Contract Counts
Include ALL project expectations from the written agreement. Any so-called gentlemen’s agreement exposes you later without recourse if your contractor gives you poor workmanship.
Borrowers should also not be led to believe they can keep any unused loan funds from the project. Although home loan construction expenses may come in under budget in some cases, those savings cannot be passed on to the borrower in cash.
Want More Information About One-Time Close Loans?
We have extensively researched 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 who know the product well and have consistently provided quality service.
If you would like to be contacted by a licensed lender in your area, please respond 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 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 - FHA / VA One-Time Close
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.
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 VA 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.
Some borrowers must get used to thinking about this, but fortunately, some general guidelines can help them through the process.
The first thing to know is that you must use state-licensed contractors. Don’t bother wasting time considering a builder who is not recognized by your state, asks for compensation in cash, or offers you a “special deal” on “surplus” materials left over from another job.
Vetting A Construction Loan Contractor
Make sure the company is current on liability insurance. Be sure to request the contractor’s license number, then vet them using the appropriate state or local government agency and local reviews of their work
When in the bidding phase, do not get just one or two bids from your proposed contractors. In stead, try for a minimum of three bids and three eferences each.
Why You Should Never Pay For Any Services In Cash
Paying " alternatively” for supplies or services leaves you vulnerable. The contractor is free to do whatever quality of work they want once you enter an “off the books” arrangement and you won’t have any recourse if the work turns out to be substandard.
Also, beware of situations where you are asked to pay ahead of completed work. Why? Payments rendered before work is approved can become problematic later.
Your construction loan is designed to have payments from escrow to the supplier or contractor. Don’t deviate from that arrangement, especially if a contractor asks you to pay in cash for certain work.
Your Contract Counts
Include ALL project expectations from the written agreement. Any so-called gentlemen’s agreement exposes you later without recourse if your contractor gives you poor workmanship.
Borrowers should also not be led to believe they can keep any unused loan funds from the project. Although home loan construction expenses may come in under budget in some cases, those savings cannot be passed on to the borrower in cash.
Want More Information About One-Time Close Loans?
We have extensively researched 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 who know the product well and have consistently provided quality service.
If you would like to be contacted by a licensed lender in your area, please respond 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 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 - FHA / VA One-Time Close
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.
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 VA 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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