One-Time Close Loans | FHA, VA, and USDA
Learn all about the VA, USDA, 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
USDA Loan - One-Time Close Construction Loan

The One-Time Close Construction Loan Process


The One-Time Close Construction Loan Process
What do buyers need to know about the One-Time Close mortgage loan process? This type of home loan is perfect for those who want to take their time to build a home to their specifications on their own lot or on land purchased in conjunction for the construction project. Who is right for an FHA One-Time Close construction loan or a VA One-Time Close mortgage?

Financial Qualifications and More

In general, well-qualified borrowers with good credit and the ability to wait until the construction and the inspections are complete before planning to move into the home. What kind of good credit? In general if you are applying for the loan without a co-borrower, a FICO score of 660 or better is recommended.

Those who are applying with another borrower may find a FICO score of 620 is also acceptable.
Military officers, federal employees, those with established careers in the private sector, and any other applicant who does not require down payment assistance should seriously consider their construction loan options if building is preferred to buying.

The One-Time Close Construction Loan Process

The journey toward a completed home built to your specifications (based on a design you agree upon with the builder) is to find an approved builder. You should know that the borrower is not approved to be their own contractor for your construction project, so don’t plan on doing the work yourself regardless of your qualifications as a builder or contractor.

You will need to have a loan amount calculated for the purpose of loan approval--your mortgage amount is not approved until you have filled out all the necessary paperwork for the loan and the loan officer must verify your employment, income, etc.

A credit check will be run. Borrowers should know that more than one credit check happens during the loan process between your application and the closing date, so beware adding new debt or applying for new credit once you have applied for the One Time Close loan until closing day.

Valuation and Down Payment

This type of home loan requires an “as completed” type appraisal. The value of the home is an important part of the home loan approval process and you should know that a down payment may not be required if certain conditions exist based on the valuation of your land. What does this mean?

Basically that you may not be required to make the usual cash payment for an FHA construction loan (VA loans in general do not require a down payment) IF the borrower already owns the land the home will be constructed upon AND there is sufficient equity in that land that meets the down payment requirements for the mortgage. The amount of equity you have in the land will depend on how long you have owned it and the appraiser’s determination of the land’s value.

After loan approval, the construction phase of the mortgage begins, with money disbursed to the contractors in the form of withdrawals from escrow.

The loan will have a closing phase, and once the construction phase of the transaction is finished the loan is converted to a permanent loan with payments due the following month.

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OTC articles
VA One-Time Close Advantages for Veterans, Military Retirees, Active Duty

There are many advantages to building instead of buying an existing home and a lot of those advantages are as much about being able to approve the design of your home and making sure it meets your needs and goals before the ground even gets broken on the construction site.

The One-Time Close Construction Loan Process

What do buyers need to know about the One-Time Close mortgage loan process? This type of home loan is perfect for those who want to take their time to build a home to their specifications on their own lot or on land purchased in conjunction for the construction project.

What You Need to Know About VA Construction Loans

Comparatively speaking, buying an existing home is a faster process than building on your own land. But a VA construction mortgage gives you the ability to approve the design for your home, which makes the wait worth it for many borrowers. What do you need to know about this process?


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