One-Time Close Loans | FHA, VA, and USDA
Learn all about the VA, USDA, and FHA versions of the One-Time Close Loan.

There are number of steps that must to be taken before closing on your One-Time Close loan, including a cost breakdown that needs to be provided by your builder.

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

The Construction Loan Process

The Construction Loan Process involves everything leading up to the closing and start of construction on your new home. Once you are approved by your lender and your builder is registered, steps need to be taken and documents need to be provided in order to make it to closing.

Drawing Plans and Specifications Are Required

A clear set of architectural drawings with floor plans, showing all dimensions and outside elevations, as well as drawings of the exterior needs to be provided in the final plans and specifications. The contractor will have to provide further details regarding the type of materials which will go into the construction of the home; wood shingle or lightweight tile roofing; brick or stone exterior.

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"Appraising a home that's not yet built is tricky, but it can be done by professional appraisers when they have detailed plans from the builder."

You'll Need an Appraisal Report

Beaver talks about the One-Time Close processThe final plans are important to understand the cost of building the home, but it is necessary for the appraisal as well. Just like any other mortgage, lenders need to know the value of your home in order to calculate its Loan-to-Value ratio. But appraising a home that has not been built is a little trickier. That's why professional appraisers need detailed plans and specifications, as well as the total budget for the project to determine its value subject to completion.

The Construction Contract Defines Responsibilities

You and your builder will draw up a Construction Contract. This agreement between both parties outlines the planned construction project, the agreed upon cost of building, and the project's timeframe. The Construction Contract must be fully turnkey, meaning the builder must be responsible for all aspects and the hiring of any and all subcontractors.

Cost Breakdown and Draw Schedule

A cost breakdown needs to be provided by your builder, including all costs going into the construction of your new home, with the total matching that on the Construction Contract. Your lender will usually provide the cost breakdown form to be completed, and have specific guidelines for how draws for the builder are determined and disbursed. Some lenders utilize a line-item percentage of completion method for determining draws while others may use a project percentage of completion method. Typically, funds are disbursed on the basis of work completed.

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Articles, Updates, and Guidelines
OTC articles
VA One-Time Close Advantages for Veterans, Military Retirees, Active Duty

There are many advantages to building instead of buying an existing home and a lot of those advantages are as much about being able to approve the design of your home and making sure it meets your needs and goals before the ground even gets broken on the construction site.

The One-Time Close Construction Loan Process

What do buyers need to know about the One-Time Close mortgage loan process? This type of home loan is perfect for those who want to take their time to build a home to their specifications on their own lot or on land purchased in conjunction for the construction project.

What You Need to Know About VA Construction Loans

Comparatively speaking, buying an existing home is a faster process than building on your own land. But a VA construction mortgage gives you the ability to approve the design for your home, which makes the wait worth it for many borrowers. What do you need to know about this process?


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