One-Time Close Loans | FHA and VA Construction Loans
Learn all about the VA and FHA versions of the One-Time Close Loan.

- Build a Home on Your Own Lot -
VA Loan - One-Time Close Construction Loan
FHA Loan - One-Time Close Construction Loan

Build a House on Your Own Land

Build a House on Your Own Land
FHA home loan rules in HUD 4000.1 include a section titled “Building on Own Land”.  Are you interested in having a house built for you on your own lot instead of having to choose from existing construction housing? Building on your own land may be for you.


Page 457 of the revised (in 2019) HUD 4000.1 is where the rules and guidelines for building on your own land are found, starting with the FHA definition of the term:

“Building on Own Land refers to the permanent financing of a newly constructed dwelling on land owned by the Borrower and may include the extinguishing of any construction loans.”
That is from HUD 4000.1. One thing that we’ll mention frequently in this article is the fact that individual lender requirements may apply for these loans; what may be permitted in the FHA rules for the program may not necessarily be offered by a lender.

Some Features or Loan Options May Vary

What do we mean? Consider the next set of instructions to the lender under the Building On Your Own Land heading; eligibility for the loan.

“The Borrower must have contracted with a builder to construct the dwelling. The builder must be a licensed general contractor.” No problems there, fairly straightforward. But the next line in the rulebook states, “The Borrower may act as the general contractor, only if the Borrower is also a licensed general contractor.”

You will find plenty of lenders who don’t want to issue loans when the borrower plans on being their own general contractor. 

Shopping around for a loan to build from the ground up may mean taking some extra time to find a lender who will let you do your own work if that’s what you want or think you want to do. But the pool of available lenders who might allow this could be quite small.

Calculating the Maximum Mortgage Amount

For FHA mortgages that involve building on your own land, the lender is required to use “the lesser of the appraised value or the documented Acquisition Cost to determine the Adjusted Value.”

Furthermore, FHA loan rules say your maximum mortgage amount is calculated “using the appropriate purchase Loan-to-Value (LTV) percentage of the lesser of the appraised value or the documented Acquisition Cost. 

What is the documented Acquisition Cost of the Property? It includes the following as detailed in HUD 4000.1:
  • Builder’s price OR;
  • A total of all subcontractor bids and materials;
  • Borrower-paid options and construction costs not included in the builder’s price to build;
  • Interest and other costs associated with a construction loan obtained by the Borrower to fund construction, if applicable.
Also applicable? Either:
  • The lesser of the cost of the land, or appraised value of the land, if the land is owned six months or less at case number assignment OR;
  • Appraised value of the land if the land has been owned for greater than six months at case number assignment or was received as an acceptable gift.
Want More Information About One-Time Close Loans?

We have done extensive research on the FHA (Federal Housing Administration), the VA (Department of Veterans Affairs) and the USDA (United States Department of Agriculture) 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. provides information and connects consumers to qualified One-Time Close lenders in an effort 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, VA and USDA 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: Kit Homes, Barndominiums, Log Cabin Homes, Shipping Container Homes, Stilt Homes, Solar (only) or Wind Powered (only) Homes.

Your email to [email protected] authorizes to share your personal information with a 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 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 $750,000 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
Before You Apply: Four One-Time Close Loan Tips

What do you need to know about One-Time Close mortgages before you apply for one? There are some issues to be aware of that can save you time and frustration--knowing before you start filling out application forms is a big help!

Construction Loans for New Borrowers

Did you know that even as a first time borrower, you may be eligible for a One-Time Close construction loan that allows the borrower to build a home on their own lot rather than buying an existing house?

One-Time Close Construction Loans for Veterans

Veterans have multiple options when it comes to deciding which type of One-Time Close construction loan to choose from. Naturally, any veteran who has the entitlement to use a VA mortgage for this loan would choose to do so based on the zero down home loan option all by itself.

-- Find More Articles in the OTC Library -- is not a government agency. We do not offer or have any affiliation with loan modification, foreclosure prevention, payday loan, or short term loan services. Neither nor its advertisers charge a fee or require anything other than a submission of qualifying information for comparison shopping ads. We do not ask users to surrender or transfer title. We do not ask users to bypass their lender. We encourage users to contact their lawyers, credit counselors, lenders, and housing counselors.

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