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

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One-Time Close Construction Loan Rules

One-Time Close Construction Loan Rules
One-Time Close construction loans have some rules you should know in the planning stages of your home loan. Some of these rules will vary from lender to lender, while others are baked into the loan programs they are part of. We examine some of them below.

Be Prepared To Show Proof Of Employment

Specifically, you will need to show employment for at least two years. Pay stubs and other documentation may be required, but your lender will provide you with that financial institution’s requirements.

Save Your Own Cash For The Down Payment

You are typically required to come up with your own down payment with a One-Time Close (OTC) mortgage. Don’t expect your lender to accept gift funds or down payment assistance from a local agency. 

Other mortgage loans don’t forbid this, and it’s not something that’s automatically restricted within government-backed loan programs.

Typically, the down payment issue is related to lender standards instead, and you should ask about such policies before you decide on a lender.

One-Time Close Loans And Land Purchases

Some borrowers assume you must own a plot of land to build on before you apply for a construction loan to build a residence. 

But you can ask the lender about buying land in conjunction with the loan. FHA loans, for example, have provisions in the program for purchasing land along with the loan.

Typically, you are required to buy land with specific plans to build on it. Any FHA or VA purchase loan will typically allow the purchase IF there are plans to build. 

Otherwise, a purchase of undeveloped land with no immediate plans to build is possible, but you can’t use a VA, FHA, or USDA home loan to do this.

After You Buy The Land, Time Is Of The Essence

Some borrowers don’t realize that when they apply for a One-Time Close loan, they will be required to start construction within a reasonable time. The idea here is to avoid allowing the purchase of undeveloped land with no plan to build, as mentioned above.

Approved Contractors

In past articles, we have discussed the fact that you cannot do your own labor when building a home with an OTC loan. There is another layer of consideration here. Your lender may or may not have a preferred builder or contractor. 

Ask about this before you commit, and if you don’t have to deal with that issue, it is smart to ask who other borrowers might have used and whether that company is worth dealing with.

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 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).

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 $1,000,000 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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One-Time Close Construction Loan Rules

One-Time Close construction loans have some rules you should know in the planning stages of your home loan. Some of these rules will vary from lender to lender, while others are baked into the loan programs they are part of.

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