One-Time Close Loans | FHA and VA Construction Loans
VA and FHA One-Time Close Construction Loans

Construction on your new home can begin once the One-Time Close loan goes to closing. Payments are made to the builder on a work-completed basis.

- Build a Home on Your Own Lot -
VA Loan - One-Time Close Construction Loan
FHA Loan - One-Time Close Construction Loan

From Construction Phase to Move-In Day

You've closed on your One-Time Close Loan, and it's time for construction on your new home to begin! Your lender will start to disburse "draws" to your contractor over time as the building progresses.

Draw Disbursement

With a Single Close loan, payments are made to the builder on a work-completed basis. Draw requests must be submitted by the builder, along with an itemized report of the progress made on the home. An additional assessment comes from an independent, third-party inspection service that determines the percentage of work completed. Once these reports are received by the lender and the draw amount determined, the disbursements are made to your builder. Some lenders may flow the funds through the closing/escrow agent, while others may disburse directly to the builder.

Learn About the One-Time Close Constuction Loan
"Once you've closed on the mortgage, construction on your new home can begin. This time period can vary, but typically doesn't exceed 9 months."

It Begins With the Start-up Draw

Beaver talks about OTC home construction issuesA start-up draw might be paid to your contractor after closing is finalized. This includes the lot payoff amount, less any down payment. Your builder receives the final draw once the project is completed. Lenders may require additional documentation before making this last payment, such as a final appraisal inspection, an endorsement from the Title Company, and proof of the homeowner's insurance policy.

Construction Period

Whether it's FHA or VA, most lenders don't want to see the construction period on your new home exceed 9 months. Every home is different, which means that this timeframe can vary according to the location and type of home. Our lenders have provided average construction periods for the different, one-unit homes financed via One-Time Close loans:

  • Site-Built homes -- 280 days average
  • Modular homes -- 240 days average
  • Manufactured homes -- 200 days average

Amortization and Move-In

During the interim construction period—however long it may be—you are typically not required to make payments on the loan or pay the construction interest. Your builder is responsible for the interest during the construction period, which is an incentive to finish building as quickly as possible. Payments are normally due once the project is complete, all required documents have been provided by your builder to the lender, and the construction portion of the loan converts to the permanent portion of the loan. Your permanent mortgage begins amortization no later than the first of the month following 60 days from the issuance of the certificate of occupancy by the local municipality or final compliance inspection, whichever comes later. No re-qualifying, no increase to your interest rate, and no additional closing costs!

See Your Credit Scores From All 3 Bureaus

Do you know what's on your credit report?

Learn what your score means.

Articles, Updates, and Guidelines
OTC articles
One-Time Close Loan Tips

One-time close construction loans through the VA and FHA programs are available to any financially qualified borrower, whether they are first-time home buyers or experienced homeowners. All VA loans have a military or uniformed service requirement, but FHA mortgages are for any financially qualified borrower. What do you need to know about these construction loans before saving for one?

Tips On Using Construction Loan Builders

If you would rather build your own new home than buy somebody else’s dream house, you have many options, including FHA One-Time Close mortgages and VA construction loans. No matter your loan type, the need for third parties, including builders, inspectors, and appraisers, is real. You likely won’t be allowed to act as your own builder, electrician, or plumber. Screening these third-party services is important.

How To Compare One-Time Close Lenders

When you decide to build your dream home, one important step is comparing participating One-Time Close lenders for VA and FHA options. When you are ready to start shopping around for a lender, it’s smart to list standard questions to ask each loan officer or financial institution. What questions should you ask when comparing OTC lenders?


-- Find More Articles in the OTC Library --

OneTimeClose.com 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 OneTimeClose.com 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.

SecureRights Advertiser Contact Information

One and Won is a registered trademark of Texcorp Mortgage Bankers, Inc.