More Answers to Common Construction Loan Questions
August 16, 2023
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.
In our last article, we answered some basic questions about building a home and what it takes to get approved for a One-Time Close construction loan.
As we noted the first time around, single-close mortgages are better for some borrowers than others. Unfortunately, some don’t realize this until they’ve submitted a loan application, only to be turned down by the lender.
Why Must I Pay More Up Front?
Typically speaking, according to some sources, you want to reserve 20% of the price of the project in cash.
This is because construction projects can experience cost overruns. If you run out of money before the project is finished, you may be forced to scramble for additional cash to get you closer to project completion.
That aside, larger down payments are typical for construction loans regardless of your cash reserves.
Why Didn’t I Qualify For A Construction Loan?
The most basic answer in some cases is that the borrower didn’t qualify with the higher FICO score guidelines many lenders use for construction loans.
If your FICO scores don’t qualify for the lowest FHA loan down payment (3.5%), you likely won’t be approved for the risker and more expensive construction loan option.
Why Did My Project Go Over Budget?
There are many reasons why a construction project can exceed the budget you set for it when the loan was approved. Rising costs for raw materials is one reason. Delays due to weather or other factors may be another.
“Cost creep” is an industry term for the rising expenses related to building a home, and the causes may also include circumstances beyond your control, miscommunications, or other issues.
Agreeing to a construction loan without a contingency budget for such issues is a mistake. Don’t assume the project will come in on time and under budget for best results.
As we noted the first time around, single-close mortgages are better for some borrowers than others. Unfortunately, some don’t realize this until they’ve submitted a loan application, only to be turned down by the lender.
Why Must I Pay More Up Front?
Typically speaking, according to some sources, you want to reserve 20% of the price of the project in cash.
This is because construction projects can experience cost overruns. If you run out of money before the project is finished, you may be forced to scramble for additional cash to get you closer to project completion.
That aside, larger down payments are typical for construction loans regardless of your cash reserves.
Why Didn’t I Qualify For A Construction Loan?
The most basic answer in some cases is that the borrower didn’t qualify with the higher FICO score guidelines many lenders use for construction loans.
If your FICO scores don’t qualify for the lowest FHA loan down payment (3.5%), you likely won’t be approved for the risker and more expensive construction loan option.
Why Did My Project Go Over Budget?
There are many reasons why a construction project can exceed the budget you set for it when the loan was approved. Rising costs for raw materials is one reason. Delays due to weather or other factors may be another.
“Cost creep” is an industry term for the rising expenses related to building a home, and the causes may also include circumstances beyond your control, miscommunications, or other issues.
Agreeing to a construction loan without a contingency budget for such issues is a mistake. Don’t assume the project will come in on time and under budget for best results.
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.
