FHA / VA / USDA One-Time Close construction loans are an important option to consider for those looking to build  a new home in California. California home values have gone up 11.2% over the past year and Zillow predicts they will continue to rise within the next year.

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One-Time Close Construction Loans in California

May 10, 2021

One-Time Close Construction Loans in California
FHA / VA / USDA One-Time Close construction loans are an important option to consider for those looking to build  a new home in California. The California housing market is an excellent place to think carefully about  building a home from the ground up with a One-Time Close (OTC) construction to permanent mortgage; A Zillow average home price report for single family homes as of March 31st, 2021 lists the national average price of $276,717 with a predicted 10.4% increase over the following 12 months.

Compare that with the California real estate stats listed by the same company; Zillow reports the California median home value as approximately $644,020, which has gone up 11.2% over the past year.

As of today’s market, it is a seller’s market with “persistent buyer demand”.  For those trying to buy an existing resale home in some parts of California, the seller’s market may work against them, and the length of time a home sits on the market may be an indication that home prices in that seller’s market may be higher than some consumers care to pay.

The persistent demand issue can also create an inventory shortage, which is one reason why borrowers may choose an  FHA / VA / USDA One-Time Close construction loan to build a home to suit their needs rather than trying to find that one perfect home in a competitive marketplace. High prices, short inventory, what is a borrower to do?

For some the answer is building a home from the ground up with a One-Time Close construction loan.

The State of California is broken down into 24 MSA’s or Metropolitan Statistical Areas which is a geographical region with a relatively high population density at its core and close economic ties throughout the area.  In California, these are broken down into the following:  Anaheim-Santa Ana-Irvine, Bakersfield, Chico, El Centro, Fresno, Hanford-Corcoran, Los Angeles-Long Beach-Glendale, Madera, Merced, Modesto, Napa, Oakland-Hayward-Berkeley, Oxnard-Thousand Oaks-Ventura, Redding, Riverside-San Bernardino-Ontario, Sacramento-Roseville-Arden-Arcade, Salinas, San Diego-Carlsbad, San Francisco-Redwood City-South San Francisco, San Jose-Sunnyvale-Santa Clara, San Luis Obispo-Paso Robles-Arroyo Grande, San Rafael, Santa Cruz-Watsonville, Santa Maria-Santa Barbara, Santa Rosa, Stockton-Lodi, Vallejo-Fairfield, Visalia-Porterville and Yuba City.

FHA / VA / USDA One-Time Close Construction to Permanent Loans are offered for new site stick build housing, new modular construction, and new manufactured construction.  While the State of California is split into MSA’s, these Single-Close construction loans are available in all 58 California counties.   OTC mortgages are a major improvement over the old construction loan process that forced borrowers to apply for not one, but TWO loans; one for the payment for labor, materials, and construction of the home and another loan that covers the actual mortgage. FHA / VA / USDA OTC loans have a single application and closing date.
No mortgage payments are required during the construction phase of the One-Time Close loan, and the borrower is protected from failing to qualify for a second loan and from rising interest rates during the construction phase.

Lender requirements will apply for OTC loans including FICO score standards and other factors. Your FICO score requirements may be higher for a construction loan, but much depends on the lender. Ask your loan officer about qualifying FICO scores. It pays not to be in a hurry with a construction loan; your dream home needs time to be built, appraised, and inspected. Some housing markets may have longer-than-usual construction permit processing times and while this has nothing to do with the loan approval procedure itself, it has the potential to change the time required to get all the necessary paperwork and permissions to build.

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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