VA One-Time Close Construction Loans
Did you know that the VA offers a One-Time Close construction loan similar to the FHA One-Time Close loan? The VA version of the One Time Close loan allows qualified borrowers to finance both the construction and the permanent loan for the home itself (the mortgage) at the same time.
With a VA One-Time Close construction loan, the borrower does not have to worry about qualifying for two home loans, two closing dates, etc. The VA loan program also includes such “two close” construction loans, but the One-Time Close version of this loan has definite advantages.
The section of VA loan rules addressing One-Time Close regulations explains, “The permanent financing is established prior to construction, and the final terms are modified to the permanent terms at the conclusion of construction. Two-time close loans generally involve an initial loan closing prior to the commencement of construction, and a second closing where permanent financing is used to take out, or replace the initial loan.”
Borrowers should know that while VA loan rules technically permit the borrower to act as her own builder, lender standards will apply.
Some lenders may not allow the borrower to work as a contractor on the project, while others may require extensive documentation (receipts, work orders, written agreements, etc.) from the borrower to account for how loan funds are spent during the construction phase. You will need to discuss what’s possible with a loan officer.
VA One-Time Close loans, like most other VA home loan products, require the borrower to occupy the home once finished. The home must be used as the borrower’s primary residence, though provisions are made for those called to active duty service, deployments, and other types of military duty.
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) and the VA (Department of Veterans Affairs) 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 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 and VA 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, including but not limited to: Kit Homes, Barndominiums, Log Cabin Homes, Shipping Container Homes, Stilt Homes, Solar (only) or Wind Powered (only) Homes, Dome Homes, Bermed Earth Sheltered Homes, Tiny Homes, Accessory Dwelling Units, or A-Framed Homes.
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Please send your email request to [email protected] which authorizes FHA.com to share your personal information with one 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 $1,000,000 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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