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

One-Time Close Construction Loans: VA, FHA, USDA

There are multiple options for those who want a One-Time Close (OTC) construction loan to build on their own land. Those who want to build but do not have land may purchase land in conjunction with the mortgage, and they can choose between several options to finance the purchase and construction.

Those options include VA, FHA, and USDA mortgages. What are some of the features of each of these loan options?

FHA One-Time Close Construction Loans

FHA OTC mortgages feature the same low down payment requirement that other FHA home loans do--3.5% down for those with qualifying FICO scores. On paper, FHA loan requirements state FICO scores 580 or above are eligible for maximum financing, but for construction loans  you may find lenders typically require a higher FICO score.

That said, FHA loans typically have lower FICO score requirements than some conventional mortgages. Compare FICO score guidelines between multiple lenders to get a better idea of how an FHA mortgage can help.

FHA loans feature no prepayment penalties. FHA loans, including construction loans, do not require the borrower to be a first-time home buyer, and there are no mortgage payments due during the construction phase of the loan.

FHA construction loans are subject to county loan limits for that area. Occupancy by at least one person obligated on the mortgage is required within a reasonable time after the construction project is finished.

In general, you will be required to use an approved contractor for OTC loans. Don’t expect to perform your own labor or hire friends and family to help, etc.

VA One-Time Close Construction Loans

VA One-Time Close construction loans are offered to a specific group of qualified borrowers; currently serving active duty, veterans, members of the National Guard and Reserve, and qualifying surviving spouses of those who have died as a result of military service.

VA construction loans have the advantage of a zero down payment option and unlike FHA OTC mortgages there is no VA loan limit for those who have 100% VA loan entitlement to use for the transaction.

Unlike FHA mortgages, VA construction loans have no VA-imposed FICO score requirements so the lender’s standards will apply. No pre-payment penalties are allowed with VA mortgages and while there is a similar occupancy requirement for VA loans, this requirement differs from FHA construction loans in that a qualifying immediate family member (spouses and dependents) can occupy the property in the borrower’s place and still meet the occupancy rules.

VA construction loans feature a VA loan funding fee, which is waived for those currently receiving or eligible to receive VA compensation for service-connected disabilities. Approved contractors must be used for VA OTC projects.

USDA One-Time Close Mortgages

USDA mortgages include a One-Time Close construction loan option. These loans are specifically for low to moderate-income borrowers, and are restricted to USDA-approved rural areas with populations up to 35 thousand. According to the official site, USDA maximum loans are determined by appraisals. Borrowers may qualify to have mortgage payments postponed during construction up to one year.

USDA construction loans can include funds to purchase land in conjunction with the construction project. You must use approved contractors to perform the labor.

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.

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