One-Time Close Loan Terms Compared
March 21, 2024
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.
Some construction loan terms are important to know before you commit to a One-Time Close loan. What do you need to know about this industry jargon?
Some single-close loan terms are similar to others and can be initially confusing, especially when industry pros use some terms interchangeably, as we discover below.
One-Time Close Interest Rates Are Not The Same As Annual Percentage Rates (APR)
The interest rate you are charged on a construction loan can be interpreted as the cost you pay the lender for giving you the loan.
A VA or FHA One-Time Close lender takes a risk by lending you the funds; the interest rate is what the lender gets in exchange for taking that chance on the borrower.
On home loans, the mortgage interest rate is charged as a percentage of the mortgage amount. When it’s time to discuss annual percentage rates, the home loan rate is part of that calculation but not the entire thing.
NerdWallet defines the annual percentage rate or APR as a term that “illustrates how much you will pay to borrow money over one year,” and if you look at a lender’s website and assume that APR = interest rate alone, you are in for a bit of a surprise.
Appraisals Are Not Inspections
This jargon initially does not seem quite relevant to construction loans since a home inspection is meant to catch problems with the property before the borrower fully commits to the mortgage.
In the case of a construction loan, if you choose to have the home inspected, it will naturally take place after you have committed to it and after the construction phase is over.
An inspection is a tool for the borrower to determine the home's true condition, and an appraisal is a tool for the lender to determine the home's market value. The appraisal is less complete than an inspection.
Should a One-Time Close borrower consider having the home inspected even though it has been built to suit and is brand new? Realtor.com says the answer should be YES.
Realtor.com notes that some borrowers will buy a new construction home after it has been built rather than applying for a loan to build from the ground up.
Those are two different types of transactions, and the borrower who is not involved in the construction project from start to finish likely needs to build a home inspection contingency clause into the loan agreement for their protection.
Homeowner’s Insurance Is Not Mortgage Insurance
Mortgage insurance is a tool for the lender to protect the bank from a borrower who defaults on their home loan. Homeowner insurance is a tool for the borrower to protect the home and its contents. The two are not the same and typically are not provided from the same sources.
Some single-close loan terms are similar to others and can be initially confusing, especially when industry pros use some terms interchangeably, as we discover below.
One-Time Close Interest Rates Are Not The Same As Annual Percentage Rates (APR)
The interest rate you are charged on a construction loan can be interpreted as the cost you pay the lender for giving you the loan.
A VA or FHA One-Time Close lender takes a risk by lending you the funds; the interest rate is what the lender gets in exchange for taking that chance on the borrower.
On home loans, the mortgage interest rate is charged as a percentage of the mortgage amount. When it’s time to discuss annual percentage rates, the home loan rate is part of that calculation but not the entire thing.
NerdWallet defines the annual percentage rate or APR as a term that “illustrates how much you will pay to borrow money over one year,” and if you look at a lender’s website and assume that APR = interest rate alone, you are in for a bit of a surprise.
Appraisals Are Not Inspections
This jargon initially does not seem quite relevant to construction loans since a home inspection is meant to catch problems with the property before the borrower fully commits to the mortgage.
In the case of a construction loan, if you choose to have the home inspected, it will naturally take place after you have committed to it and after the construction phase is over.
An inspection is a tool for the borrower to determine the home's true condition, and an appraisal is a tool for the lender to determine the home's market value. The appraisal is less complete than an inspection.
Should a One-Time Close borrower consider having the home inspected even though it has been built to suit and is brand new? Realtor.com says the answer should be YES.
Realtor.com notes that some borrowers will buy a new construction home after it has been built rather than applying for a loan to build from the ground up.
Those are two different types of transactions, and the borrower who is not involved in the construction project from start to finish likely needs to build a home inspection contingency clause into the loan agreement for their protection.
Homeowner’s Insurance Is Not Mortgage Insurance
Mortgage insurance is a tool for the lender to protect the bank from a borrower who defaults on their home loan. Homeowner insurance is a tool for the borrower to protect the home and its contents. The two are not the same and typically are not provided from the same sources.
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
One-Time Close Construction Loan Issues: Weather Delays
October 22, 2024One-Time Close construction projects are subject to many variables that can change their timelines. Weather is a particularly unpredictable factor to consider, and depending on where you live, issues may range from snow and rain to extreme temperatures. Weather is a variable that can cause construction disruptions, delays, potentially increased costs, and frustration for borrowers. Knowing that upfront can help, especially when it is time to plan your contingency fund.
Build On Your Lot in Illinois using an FHA or VA Construction Loan
October 21, 2024There is a FHA and VA government backed One-Time Close construction to permanent loan program available in Illinois for qualified applicants who are looking to build a brand-new home versus a resale.
Using a One-Time Close Residential Construction Loan to Build a Residence
October 15, 2024Building a new home can be exciting. It can also be a complex process, and it pays to understand as much of it as possible while planning your home loan. If you want to use a one-time close residential construction loan to build your home from the ground up, there are three things to consider.
