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A One-Time Close loan can help you build a home without the requirements some other construction loans have -- two applications, two loans, and two closing dates. These construction loans are for first-time home buyers AND experienced home owners alike.

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There Are Different Kinds of One-Time Close Construction Loans

January 13, 2020

There Are Different Kinds of One-Time Close Construction Loans
Are you looking to build a home from the ground up on your own land? A One-Time Close (OTC) construction loan can help you do that without the requirement some other construction loans have -- two applications, two loans, and two closing dates. Certain versions of this type of mortgage require one loan for the mortgage and a separate loan for the construction project itself.

One-Time Close Construction loans are for first-time home buyers AND experienced home owners alike. If you qualify for the loan with your credit scores, income, and employment, you can build a home of your own.

Not so with the One-Time Close mortgage. But there are several varieties of OTC loans that have their own distinct advantages and features. What are they?

1) USDA One-Time Close Loans

The USDA version of the One-Time Close loan is intended strictly for low-income to moderate-income borrowers.

There is a need-based component to USDA construction loans so if you are concerned that your household income may exceed the caps for a USDA mortgage, it’s best to look at one of the other programs (see below). The need-based component of these loans make them different from the other two types of OTC discussed here.

2) VA One-Time Close Loans

VA OTCs are for qualifying veterans and current service members who have served a minimum time in uniform. Military members and their spouses can apply for a VA loan together including construction loans.

The biggest differences for the VA version of a OTC loan include the fact that most typical VA home loans require zero money down, and starting in 2020 there are no VA loan guaranty limits, meaning that the borrower and lender can negotiate the loan amount without additional guidelines to follow from the VA itself.

3) FHA One-Time Close Loans

The FHA One-Time Close Construction loan features a low 3.5% down payment in many cases, and offers borrowers the ability to build the home from scratch without qualifying for a need-based loan (see the USDA section above). FHA loan limits increased again in 2020, adding more borrowing power in the new year. 

FHA OTC mortgages have the same FICO score requirements as the other FHA mortgages, though some participating lenders may have more strict FICO score rules for construction loans than for existing construction mortgages.


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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