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

How Much Can You Borrow to Build?

If you want to build your home instead of buying someone else’s house, there is a type of construction loan that can help. The One-Time Close construction loan eliminates the need for a second loan application and approval process compared to some other types of construction loan.

And there are different types of One Time Close mortgage to choose from. You may be eligible for a One-Time Close construction mortgage in multiple programs, which one is right for you?

USDA One-Time Close Construction Loans

The USDA One-Time Close construction loan program is intended for borrowers on restricted incomes. This construction loan features no down payment requirement, but is a need-based loan and income caps will apply. This type of construction loan is ideal for low income to moderate income borrowers who meet the USDA’s need requirements and want to build a home in an approved area.

How much can you borrow with a USDA loan? That will depend on the price of the property, the loan limits in the zip code where you are building your home, and closing costs that you choose to include in the loan where permitted.

You will only be allowed to have a loan approved for the amount required to close. You are not permitted to apply for more home loan than you need and take the remainder in cash at closing.

FHA One-Time Close Construction Loans

Unlike the USDA construction loan, FHA One-Time Close loans are NOT need-based, do not feature income caps, and are available with a very low minimum down payment requirement of 3.5%. FHA Construction Loans do not require you to be a first time home buyer--this is a myth that still persists about FHA mortgages in general.

FHA One-Time Close loans allow you to build on your own land or on land you buy in conjunction with the mortgage. If you own your land and have equity built up in it, ask your loan officer about using the land equity as a down payment.

The amount you borrow will depend on both the FHA loan limits in the area where you are building as well as any closing costs you are permitted to include into the loan amount.

But the home loan limit will not be diminished if, for example, you choose to include the FHA Up-Front Mortgage Insurance Premium (UFMIP) into the loan amount--your loan limit is determined by the asking price of the home and the limit is not affected by you financing the UFMIP.

VA One-Time Close Construction Loans

VA mortgages are unique among these One-Time Close loans since the Department of Veteran’s Affairs eliminated the cap on the maximum lending limits for VA mortgages for those who have 100% of their VA loan entitlement to use on the transaction.

You read that correctly--VA mortgages have no loan limits in such circumstances. This is NOT the case for FHA, Fannie Mae, or Freddie Mac conventional loans where the construction loan programs are capped by the county limits for each program. You and the VA lender will negotiate the loan limit for your mortgage.

A participating VA lender offering this VA Construction Loan program can impose a maximum loan amount for $0 down VA construction loan that ranges from $750,000 on up to $1,500,000. It is a very good idea to talk to a participating VA lender to discuss this option as it can save a qualifying borrower (VA loans are for military members, veterans, and certain surviving spouses of military members who died as a result of military service) a lot of money out of pocket.

Want More Information About One-Time Close Loans?

We have done extensive research on the FHA (Federal Housing Administration), the VA (Department of Veterans Affairs) and the USDA (United States Department of Agriculture) 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. provides information and connects consumers to qualified One-Time Close lenders in an effort 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, VA and USDA 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: Kit Homes, Barndominiums, Log Cabin Homes, Shipping Container Homes, Stilt Homes, Solar (only) or Wind Powered (only) Homes.

Your email to [email protected] authorizes to share your personal information with a 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 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 $750,000 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
OTC articles
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!

Construction Loans for New Borrowers

Did you know that even as a first time borrower, you may be eligible for a One-Time Close construction loan that allows the borrower to build a home on their own lot rather than buying an existing house?

One-Time Close Construction Loans for Veterans

Veterans have multiple options when it comes to deciding which type of One-Time Close construction loan to choose from. Naturally, any veteran who has the entitlement to use a VA mortgage for this loan would choose to do so based on the zero down home loan option all by itself.

-- Find More Articles in the OTC Library -- is not a government agency. We do not offer or have any affiliation with loan modification, foreclosure prevention, payday loan, or short term loan services. Neither nor its advertisers charge a fee or require anything other than a submission of qualifying information for comparison shopping ads. We do not ask users to surrender or transfer title. We do not ask users to bypass their lender. We encourage users to contact their lawyers, credit counselors, lenders, and housing counselors.

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