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

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VA Loan - One-Time Close Construction Loan
FHA Loan - One-Time Close Construction Loan
USDA Loan - One-Time Close Construction Loan

VA One-Time Close Construction Loan Availability


Some home loan applicants, especially those interested in applying for VA One-Time Close (OTC) construction loans to build on their own lot, have frustrations finding a lender who offers these types of mortgages.

Some lenders go so far as to discuss VA OTC loans on their official sites, but without actually offering the mortgages themselves. 

Borrowers who encounter this can potentially experience a high level of frustration after having spent enough time on the lender’s website reading about this VA loan option that lets you build rather than buy someone else’s home only to discover that the participating lender does not actually offer the construction loan option.

What should borrowers do to avoid this? It sounds like a no-brainer, but the best thing to do is to try exploring the lender that DOES offer the VA One-Time Close mortgage.That’s the most obvious advice, but there are a couple of hidden layers you might not realize exist.

For example, what’s the difference between a lender that does not offer the VA One-Time Close mortgage versus the participating VA lender who DOES, but won’t approve loans for certain kinds of properties like tiny homes, solar-powered houses (that rely on solar energy ONLY), barndominiums, log cabin homes, etc.?

The first lender doesn’t offer any VA One-Time Close mortgages. The second one does, but does not approve loans to build any/all property types. As you might guess, the key here is to understand that not all properties are suitable for the lender to approve loans to build, but there are plenty of housing types that DO meet the lender’s criteria and qualify for consideration under the OTC loan option.

How can you avoid wasting time when you’re interested in applying for a VA One-Time Close mortgage? The first thing to remember is that not all lenders are as well-versed in this type of mortgage as you might expect.

Searching for one that does understand what you are after might be harder than you think but once you do find a loan officer to talk to, explain up front that you want to use your VA home loan benefits to build a house on your own land or on land you will purchase in conjunction with the construction loan.

You should also decide whether you want to entertain other One-Time Close construction loan alternatives such as the FHA OTC loan. VA and FHA One-Time Close mortgages are both backed by the government, and the FHA loan option allows a low down payment of 3.5% similar to other non-OTC mortgages the agency guarantees.

To save time, you should also talk to the lender about the nature of the property you want to build--single family owner-occupied properties are eligible for both VA and FHA One-Time Close mortgages. However, if you plan to build an investment property that you aren’t going to use as your primary residence, you may be denied the loan since VA and FHA construction loans in this context are for owner-occupiers only. It may not be that your participating lender doesn’t offer the kind of mortgage loan you need but rather don’t approve loans for the specific purpose of the loan.

Talk to a lender about your construction loan needs and goals and work out the right type of mortgage loan for you. You’ll be glad you did.

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Articles, Updates, and Guidelines
OTC articles
One-Time Close Construction Loan Requirements

 While it’s true that building a home from scratch can at times be harder than buying an existing home, the effort is worth it. The key to getting started is to understand the requirements of these loans, but some are hesitant because the process is unfamiliar to them.

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!

VA One-Time Close Construction Loan Availability

How can you avoid wasting time when you’re interested in applying for a VA One-Time Close mortgage? The first thing to remember is that not all lenders are as well-versed in this type of mortgage as you might expect.


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