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.

Learn About the 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.

Articles, Updates, and Guidelines
OTC articles
Tennessee FHA and VA Construction Loans

Finding the perfect house in Tennessee that's right for your family can be difficult when there is not much inventory to choose from. This could be the right time to learn about the FHA / VA One-Time Close construction loan and build a home that suits your exact needs. 

The Importance Of Your Budget To Build A New Home

Do you want to build a home from the ground up using a One-Time Close construction loan? Those who invest in construction or renovation projects know some simple guidelines about planning the budget. If you are new to this type of home loan, you'll want to budget like the pros and there are some simple ways to do that.

Choosing The Right Place To Build Your Home

Building a new home on your own means sorting out crucial details. There are builders to hire, floor plans to review, and budget concerns to work out. And then there are the details of the home itself. Is it close enough to essential services, schools, and major highways? Is it far enough away from shopping centers and mass transit?


-- 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.