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One-Time Close loans are offered to qualified home buyers (first-time buyers or experienced home owners) who want to build a home on their own land. One-Time Close (OTC) mortgages allow you to build from the ground up instead of buying an existing home.

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FHA.com is a privately owned website, is not a government agency, and does not make loans.

One-Time Close Loans And Your FICO Scores

December 12, 2019

One-Time Close Loans And Your FICO Scores
One-Time Close loans are offered to qualified home buyers (first-time buyers or experienced home owners) who want to build a home on their own land. One-Time Close (OTC) mortgages allow you to build from the ground up instead of buying an existing home.

For FHA and VA One-Time Close loans, the government backs the mortgage loan which gives more justification for loan approval by the lender. The FHA and VA make it easier to extend credit compared to the higher FICO score requirements of some conventional loans.

FICO Score Requirements For One-Time Close Mortgages

VA One-Time Close mortgages have no VA-specified FICO score ranges--those requirements are left up to the lender.

FHA loan rules technically permit FICO scores between 500 and 579, but with a higher down payment required. Maximum financing is available for borrowers with FICO scores higher than 580. A down payment is still required, but is lower--only 3.5% compared to the 10% down required of those with FICO scores between 500 and 579.

These are FHA minimum requirements, but lenders often require higher FICO scores. This is permitted by FHA loan rules as long as those higher requirements are in accordance with federal law.

Loan Approval FICO Scores

Published sources indicate that FICO scores of 620 or better are typical for participating lenders. Home loans are often approved at FICO scores of 680 or better. So why does the FHA say one thing when the lender has higher requirements? Because the FHA standard is the minimum, the baseline.

The lender may have a more strict standard. It’s not always the case, either, which is why it pays to shop around for a construction loan.
It’s not as confusing when you recognize that other factors can go into loan denial that have nothing to do with FICO scores.

A high debt-to-income ratio, for example, may be an issue that keeps an otherwise qualified FHA loan applicant from getting loan approval. The same goes for borrowers who technically have FICO scores within the range the lender wants, but have issues on their credit history such as a bankruptcy, unresolved federal debt, judgments, etc.


Construction Loans at OneTimeClose.com FHA, VA, and USDA: One-Time Close Loans


Learn More About FHA One-Time Close Construction Loans

We have done extensive research on FHA One-Time Close mortgages and spoke directly to the licensed lenders for most states. These are qualified mortgage loan officers who work for lenders that know the product well. 

Each company has supplied us the guidelines for their product. If you are interested in being contacted by one licensed lender in your area, please respond to the below questions to save time. All information is treated confidentially.

Your response to [email protected] authorizes FHA.com to share your personal information with a licensed mortgage lender in your area to contact you.

Please note that the FHA One-Time Close Construction Program only allows for single family dwellings (1 unit) – and NOT for multifamily units (no duplexes, triplexes or fourplexes).

1. Send your first and last name, e-mail address, and contact telephone number.

2. Tell us the city and state of the proposed property.

3. Tell us your credit score and/or the Co-borrower’s credit score, if known. 620 is the minimum qualifying credit score for this product.

4. Are you or your spouse (Co-borrower) eligible veterans?

5. If either of you are eligible veteran’s, the down payment is $0 up to the maximum VA lending limit for your county. If not, the FHA down payment is 3.5% up to the maximum FHA lending limit for your county.

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