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

One-Time Close Construction Loan Requirements


Many borrowers would consider building their home on their own lot or on land they buy in conjunction with the home loan. But some are hesitant because the process is unfamiliar to them and may seem a bit daunting. 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.

One-Time Close Construction Loan Requirements: Credit Scores

Expect to be held to a higher credit standard for a construction loan whether you are applying for an FHA One-Time Close mortgage, a VA construction loan, or the USDA version.

Expect your credit score requirements for a construction loan to be in the 600s--the VA, FHA, and USDA FICO score minimums are lower, but lender standards also apply and such standards usually fall in the 600 range. Single applicants applying for an FHA One Time Close loan can expect FICO score requirements at or near 660 in many cases.

Construction Loan Requirements: Interest Rates and Escrow

One-Time close loans to build instead of buy typically feature fixed-rate mortgages. Your interest rate will not go up or down in the construction phase, nor will it change when construction is over and you have moved into your new home. The rate you negotiate with the lender is the rate you will pay for the lifetime of the loan unless you refinance your mortgage.

You should expect to create an escrow account for your mortgage once it is approved as the construction loan process will require cash draws from the account to pay contractors, pay for materials, etc.

Down Payment Rules

FHA, VA and USDA construction loan programs offer loans to qualifying borrowers with no down payment if the applicant owns the property the home is being built upon and there is enough equity in the land to meet the minimum borrower investment requirement for loan approval.

In cases where the land is being purchased in conjunction with the mortgage and the land is financed as part of the loan, a down payment may be required depending on the program you choose.

Down Payment Assistance

Borrowers who are considering a construction loan but need down payment help should know that for One-Time Close construction loans, down payment assistance is generally not permitted.

Approved One-Time Close Housing Types

One-Time Close construction loans are for “typical” construction projects. Barndominiums and tiny homes, which are housing fads some applicants might be interested in pursuing, require specialized construction that falls outside the scope of the FHA, USDA, and VA One-Time Close programs.

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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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