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

Can I Build A Home With An Adjustable-Rate Mortgage?

Can I Build A Home With An Adjustable-Rate Mortgage?
If you are interested in building your own home on your own land (or land you purchase in conjunction with the construction loan), you are likely examining your options with an eye on rising interest rates.

Are there ways to mitigate higher mortgage rates and get into a more affordable loan?
With mortgage rates higher in 2022, many borrowers may be tempted to consider applying for an adjustable-rate mortgage. 

And many of the home loan programs that may offer construction loans do come in both fixed-rate and adjustable-rate options. But if you are in the market for a One-Time Close mortgage, the issue might be lender willingness rather than the program itself.

Did you know that on paper, the FHA 203(k) Rehabilitation Loan (used as a loan to buy and renovate a fixer-upper) is offered as an adjustable-rate mortgage?

But a 203(k) is not the same as a construction loan, and even then it’s up to the lender to offer the ARM loan option if they so choose.

Is An Adjustable-Rate Mortgage Possible For A Single-Close Transaction?

Before we answer that one, it’s important to note that construction loans may feature an adjustable rate for the construction phase of the loan, which will convert to a fixed-rate mortgage when the building project is done and you are cleared to move into the property.

The adjustable-rate period ends, and for typical construction loans, you may find the lender unwilling to keep the adjustable rate.

What Are My Options For Reducing The Interest Rate?

Since you may not be likely to find a One-Time Close loan at an adjustable mortgage rate, you can discuss other options with the lender such as buying discount points, and you should definitely consider refinancing as soon as rates go back down to more borrower-friendly levels. 

The worst option is to build the home without a strategy to get into a lower rate as soon as you can.
There are other options that could help control the cost of your loan over time. One is to make a larger down payment, reducing the principal balance and being charged less over time for that balance. 

Loan Repayment Strategies

You can also consider strategies that help pay down your loan faster, such as paying the same mortgage payment amount each month but paying it in 50% installments twice a month. 

That lowers your principal balance by adding an extra payment each year. If you pay a single full payment each month of $1000, you make 12 payments on your construction loan in a year. But if you cut that $1000 in half and pay $500 every two weeks, you have made 26 payments of $500. 12x1000=$12,000 while 26 x $500 = $1300.

You have made an extra house payment for the year without ever having spent more than you owe on the mortgage each month.

Want More Information About One-Time Close Loans?

We have done extensive research on the FHA (Federal Housing Administration) and the VA (Department of Veterans Affairs) 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 with 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 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 and VA One-Time Close Construction Program only allow 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. 

Contact Us:  Send Us Your Request – Spam Safe 

Please send your email request to [email protected] which authorizes to share your personal information with one 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 is an eligible veteran, 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 $1,000,000 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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OTC articles
Pros And Cons Of Building A Home

Is it smarter to build a home or buy one? In late 2022 some borrowers are asking that question, faced with rising interest rates, a lack of inventory, and high prices. What are the pros and cons of building your own home on your own lot with a One-Time Close mortgage?

Things To Know Before You Commit To A Lender

If you are planning to build a house with a single-close construction loan, there are a few questions you should ask before you commit to working with a construction lender. You want to know a few things about that financial institution before moving forward.

Could Home Loan Reform Expand Your Construction Loan Options?

The federal government is considering ways to reduce bias in the home-buying process. And one area in particular being scrutinized? Appraisals. The appraisal is a process where the home is reviewed to ensure it meets minimum standards and meets state/local building codes. It’s also the way the lender establishes the fair market value of the property. For a One-Time Close construction loan, the appraisal process works a bit differently than for existing construction property.

-- 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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