March 3, 2021
There is a kind of home loan called a One-Time Close construction loan that lets you build a home on your own lot. There are government-backed One-Time Close construction loans offered including a USDA version of the One-Time Close construction loan, a VA Loan allowing you to do the same thing, and an FHA One-Time Close construction loan.
The One-Time Close mortgage features a single application and closing date for the entire process–compare that to construction loans that feature one application and one closing date for the construction phase plus a separate application and closing date for the purchase of the property once it has been built.
This is NOT how the process works with the One-Time Close loan which makes this process easier for borrowers and lenders by eliminating the need to complete TWO approval processes.
USDA One-Time Close Construction Loans
USDA One-Time Close loans are need-based loans aimed at low and moderate-income applicants in rural areas.
These loans feature household income restrictions common for the USDA home loan program and you will be required to certify that your household income overall does not exceed the caps for this program.
If you do not meet the USDA’s low-to-moderate income requirements, you won’t qualify for the loan even with good credit. Meeting the income restrictions is key for this type of loan to get approved.
The USDA official site explains that these loans are not available everywhere–only in certain approved areas. According to the official site, “USDA finances housing in eligible rural areas with populations up to 35,000”.
VA One-Time Close Construction Loan Options
The main detail most potential borrowers need to know when reviewing the option to apply for a VA One-Time Close construction loan? To be approved, you must be either:
–An eligible veteran with qualifying military service;
–A qualifying surviving spouse of a veteran who has died as a result of military service.
If you don’t fit into one of those two categories, the VA One-Time Close loan is not open to you. The first question people ask at this stage is what would be considered qualifying military service?
There is no single answer, sadly. It all depends on what era you joined the military in–talk to a lender if you believe you may be entitled to VA home loan benefits, the participating lender can help you establish your eligibility.
FHA One-Time Close Construction Loans
Of the three loan types discussed here, the FHA One-Time Close loan is the most available because FHA construction loans can be approved for ANY financially qualified applicant.
A lot of people still believe myths about the FHA loan program; don’t be folled. These One Time Close construction loans offered under the FHA program are NOT restricted to first-time home buyers, nor are they limited to those who have a financial need.
That is correct–FHA construction loans are NOT need-based loans like the USDA version. Furthermore, they are not tied to military service like VA mortgages. Talk to a participating lender today (see below) to get more information on your options to build a home instead of buying somebody else’s house.
Want More Information About One-Time Close Loans?
One-Time Close Loans are available for FHA, VA and USDA Mortgages. These loans also go by the following names: 1 X Close, Single-Close Loan or OTC Loan. This type of loan allows for you to finance the purchase of the land along with the construction of the home. You can also use land that you own free and clear or has an existing mortgage.
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 to one licensed construction lender in your area, please send responses to the questions below. All information is treated confidentially.
OneTimeClose.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). You CANNOT act as your own general contractor (Builder) / not available in all States.
In addition, this is a partial list of the following homes/building styles that are not allowed under these programs: Kit Homes, Barndominiums, Log Cabin or Bamboo Homes, Shipping Container Homes, Dome Homes, Bermed Earth-Sheltered Homes, Stilt Homes, Solar (only) or Wind Powered (only) Homes, Tiny Homes, Carriage Houses, Accessory Dwelling Units and A-Framed Homes.
Your email to info@onetimeclose.com authorizes Onetimeclose.com to share your personal information with a mortgage construction 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 veteran’s, down payments as low as $0 may be available up to the maximum amount your debt-to-income ratio VA will allow – there are no maximum loan amounts as per VA guidelines. Most lenders will go up to $1,000,000 and review higher loan amounts on a case by case basis. If not an eligible veteran, the FHA down payment is 3.5% up to the maximum FHA lending limit for your county.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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