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

One-Time Close loans come with a set of closing costs. Many of these costs are detailed in the builder's Construction Contract.

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

Understanding Your Loan Costs

As a buyer, it makes sense that your number one question would be, "How much is this going to cost me?" You'll see many costs detailed in the Construction Contract between you and your builder, and then some more on the Loan Estimate that you receive from your lender. It's important that you understand what all those numbers represent.

Apply Now for Your One-Time Close Constuction Loan
"As the name suggests, the One-Time Close loan comes with one set of closing costs that usually fall between 2 and 5 percent of the total price."

What Are Soft Costs?

Beaver helps you understand your OTC loanSoft costs include any and all costs that are the builder's responsibility. These are not part of the actual construction, but necessary for facilitating it, such as permit fees, engineering fees, architectural fees, inspection fees, construction financing costs, and construction interest.

What Are Hard Costs?

Hard costs are the tangible costs necessary for the actual construction of the home, which includes all materials and labor costs.

Allowances

Funds included in the construction budget, called allowances, are allocated for anything that will be added to the house in the future. This can include flooring, fixtures, and cabinetry.

Contingency Reserve

Some Lenders may add a contingency reserve to the builder's total, usually around 10 percent. Other lenders leave it up to the builder and borrower to determine an agreeable amount for contingency to be included in the Construction Contract. This is meant as padding in the budget in the case of unforeseen costs or upgrades that might come up during construction. Any unused portion of this contingency becomes a principal reduction to the borrower's permanent loan when construction is complete.

Closing Costs

The amount you pay in closing costs may vary according to the lender. These can include the usual fees that come with a mortgage, such as application fees, appraisal fees, and credit reports. Closing costs amount to approximately 2 to 5 percent of the purchase price, so it's a good thing you only have to pay them once with the Single Close Loan!

Interested Party Contributions

Many FHA and VA mortgage transactions can be structured to have Interested Party Contributions, sometimes referred to as Seller Concessions. Using these can allow the closing costs/prepaids to be financed into the loan. For example, on an FHA loan where a 3.5 percent down payment is required, assuming the appraisal supports the loan amount needed to cover the costs, the Construction Contract can be structured to include Contributions from the Builder for the borrower's closing costs/prepaids.

Structuring the loan in this manner allows the borrower to invest only 3.5 percent of the acquisition cost, otherwise, the borrower would have to invest that, plus their closing costs/prepaids. The seller can also contribute towards closing costs/prepaids, but the total contributions from all interested parties cannot exceed 6 percent of the acquisition cost on FHA loans.

See Your Credit Scores From All 3 Bureaus

Do you know what's on your credit report?

Learn what your score means.

Your Scores Now
Articles, Updates, and Guidelines
OTC articles
One-Time Close Mortgage Scams

Major lenders are publishing warnings to One-Time Close borrowers and other mortgage applicants. These warnings are about sophisticated scams designed to fool even the most security-minded borrower, and there are important steps you should take in conjunction with your One-Time Close loan officer to avoid being swindled out of your cash to close.

How Long To Wait Before You Apply For A Construction Loan

The headline of this article might make some ask, “How long must I wait to apply for a construction loan after...what?” And there are several answers you should know about. The key here is to understand loan program standards and lender requirements equally.

Build On Your Own Lot in Georgia with an FHA / VA Construction Loan

In 2024, the FHA floor in the State of GA was increased to $498,257 and the FHA ceiling was increased to  $649,750 for single-family home loans in the State of GA.  Now may be the time to start looking into building a home that suits your exact needs.  Residents in Georgia are finding out that they can utilize these low-down payment construction programs in order to build a new home with the same underwriting guidelines and qualifications as if they were purchasing a resale.  Learn more about One-Time Close construction mortgages.  


-- 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.