One-Time Close Construction Loans: Build Or Buy?
July 16, 2019
Build or buy? The One-Time Close construction loan, an option for FHA loan applicants, VA loan applicants, and USDA borrowers, offers the ability to have a home built from the ground up. Is this the right choice for you?s
Construction Loans for Borrowers Who Can’t Find a Suitable Existing Construction Home
Some house hunters hit the market with specific ideas about what they want from a new home. For some, enough space to raise a future family in is a consideration. For others, a garage with room for tools and a work area may be a priority.
Others may wish to have a multi-story home or an extra bedroom to use as a home office or work space. It may be easy to find some of these features in existing construction homes, but if a borrower can’t find the right property, it may be a good idea to consider having one built to suit.
Build Or Buy? Time Factors
Some borrowers have a sense of urgency about getting moved into a new home. If you cannot wait out the construction phase of an FHA One-Time Close construction loan, which may take up to a year to complete depending on project and other considerations, an existing construction FHA loan may be best.
But those who can wait out the construction phase, a One-Time Close mortgage could be the best option when it comes to getting the desired features or configuration of the home just right.
Mortgage Payment Issues
Depending on the nature of your One-Time Close construction loan, your mortgage payments will not be due right away-your payments may be required once the construction phase is completed and you take possession of the home.
But the term of the loan still applies even with a delayed start-unlike existing construction loans where mortgage payments start right away, the borrower with a One-Time Close loan should expect to negotiate the payments with the lender to accommodate the portion of the loan term under the construction phase.
Ask your lender how delayed payments will require an adjustment of either your monthly mortgage amount or a balloon payment at the end of the mortgage term.
FHA, VA, and USDA: One-Time Close Loans
Want More Information About One-Time Close Loans?
We have done extensive research on the FHA (Federal Housing Administration), the VA (Department of Veterans Affairs) and the USDA (United States Department of Agriculture) One-Time Close Construction loan programs. We have spoken directly to licensed lenders that originate these residential loan types in most states and each company has supplied us the guidelines for their products. We can connect you with mortgage loan officers who work for lenders that know the product well and have consistently provided quality service. If you are interested in being contacted by a licensed lender in your area, please send responses to the questions below. All information is treated confidentially.
FHA.com provides information and connects consumers to qualified One-Time Close lenders in an effort to raise awareness about this loan product and to help consumers receive higher quality service. We are not paid for endorsing or recommending the lenders or loan originators and do not otherwise benefit from doing so. Consumers should shop for mortgage services and compare their options before agreeing to proceed.
Please note that investor guidelines for the FHA, VA, and USDA One-Time Close Construction Program only allows for single family dwellings (1 unit) – and NOT for multi-family units (no duplexes, triplexes or fourplexes). In addition, the following homes/building styles are not allowed under these programs: Kit Homes, Barndominiums, Log Cabin Homes, Shipping Container Homes, Stilt Homes, Solar (only) or Wind Powered (only) Homes.
Your email to [email protected] authorizes FHA.com to share your personal information with a mortgage lender licensed in your area to contact you.
Construction Loans for Borrowers Who Can’t Find a Suitable Existing Construction Home
Some house hunters hit the market with specific ideas about what they want from a new home. For some, enough space to raise a future family in is a consideration. For others, a garage with room for tools and a work area may be a priority.
Others may wish to have a multi-story home or an extra bedroom to use as a home office or work space. It may be easy to find some of these features in existing construction homes, but if a borrower can’t find the right property, it may be a good idea to consider having one built to suit.
Build Or Buy? Time Factors
Some borrowers have a sense of urgency about getting moved into a new home. If you cannot wait out the construction phase of an FHA One-Time Close construction loan, which may take up to a year to complete depending on project and other considerations, an existing construction FHA loan may be best.
But those who can wait out the construction phase, a One-Time Close mortgage could be the best option when it comes to getting the desired features or configuration of the home just right.
Mortgage Payment Issues
Depending on the nature of your One-Time Close construction loan, your mortgage payments will not be due right away-your payments may be required once the construction phase is completed and you take possession of the home.
But the term of the loan still applies even with a delayed start-unlike existing construction loans where mortgage payments start right away, the borrower with a One-Time Close loan should expect to negotiate the payments with the lender to accommodate the portion of the loan term under the construction phase.
Ask your lender how delayed payments will require an adjustment of either your monthly mortgage amount or a balloon payment at the end of the mortgage term.
FHA, VA, and USDA: One-Time Close LoansWant More Information About One-Time Close Loans?
We have done extensive research on the FHA (Federal Housing Administration), the VA (Department of Veterans Affairs) and the USDA (United States Department of Agriculture) One-Time Close Construction loan programs. We have spoken directly to licensed lenders that originate these residential loan types in most states and each company has supplied us the guidelines for their products. We can connect you with mortgage loan officers who work for lenders that know the product well and have consistently provided quality service. If you are interested in being contacted by a licensed lender in your area, please send responses to the questions below. All information is treated confidentially.
FHA.com provides information and connects consumers to qualified One-Time Close lenders in an effort to raise awareness about this loan product and to help consumers receive higher quality service. We are not paid for endorsing or recommending the lenders or loan originators and do not otherwise benefit from doing so. Consumers should shop for mortgage services and compare their options before agreeing to proceed.
Please note that investor guidelines for the FHA, VA, and USDA One-Time Close Construction Program only allow
Your email to [email protected] authorizes FHA.com to share your personal information with a mortgage lender licensed in your area to contact you.
- Send your first and last name, e-mail address, and contact telephone number.
- Tell us the city and state of the proposed property.
- Tell us your and/or the Co-borrower’s credit profile: Excellent – (680+), Good - (640-679), Fair – (620-639) or Poor- (Below 620). 620 is the minimum qualifying credit score for this product.
- Are you or your spouse (Co-borrower) eligible veterans? If either of you are eligible veterans, down payments as low as $0 may be available up to the maximum amount your debt-to-income ratio per VA will allow – there are no maximum loan amounts as per VA guidelines. Most lenders will go up to $750,000 and review higher loan amounts on a case by case basis. If not, the FHA down payment is 3.5% up to the maximum FHA lending limit for your county.
Do you know what's on your credit report?
Learn what your score means.
