Finding the Right Home Builder
Finding the right builder can be a challenge, especially for first-time buyers who don't know where to start. That's where we can help! Our lenders have created relationships with many contractors who are experienced in the One-Time Close process. They can help get you in touch with knowledgeable contractors who are not only familiar with this particular mortgage process, but can also help guide you to make the best choices, while keeping the vision you have for your new home!
However, if you're a homebuyer planning to find and employ your own contractor, it's important that you know the guidelines every builder must meet for FHA or VA Single Close Loans.
Do I Need to Hire a Builder?
First things first- you cannot act as your own builder, whether or not you have the experience. Nor can you be responsible for hiring any sub-contractors. The builder you select must be a separate party who acts as the general contractor or construction coordinator, meaning he is responsible for "turnkey" completion of the property and all site improvements. You cannot hire a contractor you are related to, either!
Note: Borrowers should know that while FHA and VA loan rules permit the borrower to act as their own builder, lender standards still apply. Seller, borrower, and/or family members cannot act as contractor or complete any work on the home. Just to be clear, you must use the licensed/approved builder from start-to-finish and cannot deviate from the plans whatsoever.
Connecting the Builder and the Lender
Any builder you select needs to be registered with your lender. While the guidelines may differ depending on the lender, your builder will typically need to send in certain documents to gain authorization, such as:
- Complete Builder/Retailer Application package provided by your loan officer
- Builder/Retailer State License
- Certificate of insurance for inland marine coverage, or builder's risk/course of construction insurance will be required on every loan
- Certificate of insurance for General Liability and Workers Compensation (or letter explaining why it is not required)
- For site-built homes: 2 years federal tax returns and year-to-date profit/loss statement, current balance sheet or personal financial statement, and executive summary with overview of experience and history on company and principal
- For VA approval, builders/retailers will need to be registered with the VA
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February 20, 2025Imagine you’re building a house. Traditionally, you'd get one loan for the construction, then another to buy the finished house. An One-Time Close construction loan (also known as an OTC mortgage) simplifies this. It's a single loan that covers both the construction and the final mortgage. You close just once, hence the name. Government programs like FHA, VA, and USDA offer these options to qualified applicants.
January 23, 2025Saving for a down payment is a big challenge in building a home. It may seem daunting until you learn about the factors affecting how long it takes to save and the strategies you should consider to reach your goal faster. In addition, there is the need to save for closing costs, and it becomes clear that a detailed plan may be needed to get you into your new dream home. How long will you save the money for your home loan costs, including downpayment? Much depends on your personal circumstances.
January 16, 2025Ever dream of building your own home, customized to your exact tastes and needs? Navigating the world of construction loans can be daunting at first. Some people find themselves juggling a short-term loan for the building phase and scrambling to secure a separate mortgage once the house is complete. But there is a more straightforward way: the single-close construction loan.
