VA One Time Close Construction Loan
What is a VA One Time Close Construction Loan? If you’re a Veteran or have a loved one who has served as member of the Armed Forces, you’ll understand sacrifices such as being away from family, missing the birth of your child, experiencing battle trauma—or worse. Perhaps one common challenge faced by Veterans when you finally make it home is difficulty integrating back into civilian life.
Needless to say, you are our heroes and you deserve the best benefits. One such benefit relates to housing. It’s called the VA One-Time Close Construction Loan. Call 302-703-0727 to talk to a VA Lending Specialist about a VA Construction or get started online APPLY ONLINE
What is a VA One-Time Close Construction Loan?
First, let’s define “construction loan.” A construction loan is a short-term loan you take to finance the building of your home or another real estate project. Note that this type of loan is for when you are custom-building your home. You don’t take a construction loan if you’re purchasing an existing house that’s already built and standing. You’ll need a permanent mortgage for that.
Now if there’s a one-time close, there must also be a two-time close, right?
Correct. A standard construction loan is usually two-time close. This means you take a loan to cover the cost of the project. After the project is completed, you will need to take a second loan that will also serve as a standard mortgage which you’ll be paying over a number of years. Two-time close loans mean there are two start dates and two closing dates, which means two sets of closing costs.
Meanwhile, a one-time close loan eliminates paying two sets of closing costs, which may add up to anywhere between $3000 to $6000. Another advantage of a one-time close loan is you are aware of all the terms, unlike a two-time close where you may get one construction loan and then need to settle for a loan that you may not be comfortable with just to be able to pay off the construction loan. With a one-time close loan, you have more flexibility and freedom
The VA One-Time Close Construction Loan allows qualified borrowers to finance both the construction loan and the permanent loan (or the mortgage) at the same time. Veterans do not have to worry about qualifying for two home loans and the two closing dates.
The Greatest Advantage of a VA OTC Construction Loan? Zero Down Payment!
The advantage a VA One time Close Construction loan has compared to another type of loan, the FHA One-Time Close Construction Loan, is that VA counterpart is zero down payment. FHA loans are open to any financially qualified applicant but will require a down payment. For the qualified Veteran, there’s no need.
- One Closing and one of qualification for land and construction
- Zero Down payment required
- No Monthly Mortgage Insurance Required
- No Payments Until Construction is complete
Do you want to know if you’re eligible for this loan? Check your eligibility here.
VA One Time Close Construction Loan Terms and Conditions
Like most other VA home loans, VA one-time close construction loans require the borrower to occupy the home once it’s finished. The Veteran must also be the primary occupant of the home, with provisions being made for those who are called to active duty service, deployments and other types of military duty that requires the Veteran to be away
Another thing you must know, most VA loan transactions will require a VA loan funding fee. However, Veterans who are eligible to receive VA disability benefits may get the dual benefit of no down payment and no VA loan funding fee.
VA Construction Loan Basics:
- Provides construction financing, lot purchase, and permanent loan
- Single closing reduces closing costs and paperwork
- Permanent portion of the VA loan approved before construction begins
- Construction portion also underwritten and approved
- No mortgage payments due during construction period
- No re-qualification once construction is complete for VA Loan
- 100% financing through VA (funding fee may be financed into the loan)
- Mortgage Interest rate protected during construction
- 15 year and 30 year fixed term options
- 620 minimum qualifying credit score
- One unit stick-built house, new manufactured, multi-wide housing, modular homes
- Primary residence only
Eligibility Requirements for VA Construction Loan
In order to qualify to be eligible for a VA Construction Loan, you must meet the requirements for a VA Home Loan which means you must be a qualifying active duty member of the U.S. Military, veteran, or surviving spouse. A Certificate of Eligibility (COE) is required. Other requirements of the VA Construction Loan include:
- Borrower cannot perform any of the work
- Builder must provide a one-year VA Builder’s warranty
- General Contractor must be registered with the VA
- General Contractor must carry sufficient insurance through a current general insurance liability policy
- VA regulations require periodic inspections of properties under construction
- 620 minimum FICO score
How Do You Apply for a VA Construction Loan?
Are you a Veteran who is looking at building your home? It will be our great honor and privilege to help you get set up. Call us on 302-703-0727.
If you would like to apply for a VA One-Time Close Construction Loan, you can APPLY ONLINE HERE, you can call John Thomas at 302-703-0727.
John R. Thomas – NMLS 38783
Certified Mortgage Planner – Primary Residential Mortgage, Inc.
302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office
248 E Chestnut Hill Rd, Newark, DE 19713