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While VA construction loans don’t require a down payment in most cases, borrowers with FICO scores that would require money down will be required to provide the funds without outside assistance. The same is true of those who don’t have to make a down payment but choose to do so anyway.

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

Introduction to VA One-Time Close Construction Mortgages

September 24, 2020

Introduction to VA One-Time Close Construction Mortgages
The One-Time Close loan is a type of mortgage for those who wish to build a home on their own lot or on land they purchase in conjunction with the plans to build. These mortgages are offered to qualifying military members and certain surviving spouses of military members who have died as a result of military service.

The VA One-Time Close construction loan is offered with the same terms as any other VA home loan. It features no down payment in most cases, no mortgage insurance requirement, and there is no penalty for early payoff of the mortgage.

VA construction loans are a unique type of mortgage loan, but even a qualified first-time home buyer is permitted to apply. But there are things a borrower should know about these loans. One important issue--time.

Building a home on your own lot means you will need to build in time for the construction to complete--you’ll need to anticipate keeping your current housing (or making other housing arrangements) long enough for the construction phase to complete, have inspections completed, etc.

The benefits of taking that extra time are obvious--the ability to approve the design of your home, choose the materials you prefer and be involved in the decision making process for other aspects of the home.

VA construction loans are for approved housing types--some types of home cannot be approved under this program. These include:
 
  • Barndominiums (metal buildings with inside living quarters)
  • Kit homes
  • Log cabin homes
  • Shipping container homes
  • Stilt homes
  • Solar-powered homes
  • Tiny homes / tiny houses
  • Wind powered homes
Other restrictions may, depending on the lender, include restrictions on the use of down payment grants.

While VA construction loans don’t require a down payment in most cases, borrowers with FICO scores that would require money down will be required to provide the funds without outside assistance. The same is true of those who don’t have to make a down payment but choose to do so anyway to lower the amount of their VA loan funding fee or to cut the total cost of the loan overall.

VA construction loans may have a few extra restrictions compared to buying an existing construction home, but they definitely provide an advantage for people who want a more customized home from Day One.

Construction Loans at OneTimeClose.com 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.
  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 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.
  4. 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.

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