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One-Time Close Loans

Overview:

Building a custom home is an exciting journey that allows you to create the house of your dreams, perfectly tailored to your needs and preferences. However, finding the right financing can be a daunting task. Fortunately, a one-time close construction loan offers a practical and efficient solution to finance both the land and construction process. In this guide, we will explore everything you need to know about one-time close construction loans, including their benefits, qualification requirements, loan programs, payment structure, and the step-by-step process to build your dream home.

The Highlights:

  • Downpayments as low as 5%

  • No Re-Qualifying

  • Lock in low interest rates

  • Single closing reduces closing costs, saving borrowers money

  • Available for FHA, USDA, VA, and Conventional Loans

  • Option to float rate at project completion

Additional Items:

Suburban Homes

UNDERSTANDING THE DETAILS

SECTION 1

Understanding One-Time Close Construction Loans

One-time close construction loans are a convenient financing option that allows you to combine the purchase of land and the construction costs into a single loan. This approach streamlines the financing process and reduces the need for multiple loans and refinancing.

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Benefits of a one-time close construction loan:

  • Finance both land and construction costs in one loan

  • Simplified process compared to traditional construction financing

  • Options for conventional, FHA, USDA, and VA loans

  • Wide range of eligible property types, including modular and manufactured homes

  • Flexible loan term options, including 15-year, 30-year, and adjustable-rate mortgages

SECTION 2

How One-Time Close Construction Loans Work

To obtain a one-time close construction loan, you'll need to establish a budget based on the estimated cost of building your home and the appraised value. This budget will determine the loan-to-value ratio and your down payment requirement.


During the construction phase, you'll make interest-only payments based on the amount drawn from the loan to finance the ongoing construction. The payments will increase as the loan balance grows with the progress of the construction. Once the home is complete, the loan will convert into a regular mortgage, and you'll begin making principal and interest payments.

SECTION 3

VA One-Time Close Construction Loans

For eligible veterans, the VA offers one-time close construction loans with some unique features. VA loans typically require a minimum credit score of 620, and they offer a 100% loan-to-value ratio, meaning no down payment is required. Additionally, VA loans allow borrowers to borrow up to four million dollars for custom home building.


One of the significant benefits of VA one-time close construction loans is that there are no payments during the construction phase. The interest-only payments are rolled back into the loan, providing more financial flexibility for veterans.

SECTION 4

The Process of Obtaining a One-Time Close Construction Loan

The process of securing a one-time close construction loan involves several essential steps:

 

  • Pre-Approval: Begin by seeking pre-approval, where you'll discuss your goals, budget, and timeline with your lender. The pre-approval process will help establish a budget for your dream home.

  • Selecting the Home Design: Determine the number of bedrooms, square footage, and overall appearance of your home. Decide on construction specifications, finishes, and materials.

  • Vetting the Builder: Choose a reputable and experienced builder who can bring your vision to life. Builders must go through an approval process, including verifying their experience, insurance, and references.

  • Shopping for Land: With your budget and plans in hand, search for suitable land to build your dream home. Once you find the perfect plot, put it under contract.

  • Property Appraisal and Rate Lock: Once the land is under contract, have the property appraised to ensure it's worth the build cost. Lock in your interest rate to secure the financing terms.

  • Closing the Loan: After finalizing the appraisal and rate lock, close the one-time close construction loan. The construction can begin once the loan is closed.

CONCULSION

One-Time Close Construction Loans 

Building your dream home becomes a reality with a one-time close construction loan. By combining land purchase and construction financing into a single loan, you can streamline the process and focus on creating a home that perfectly reflects your style and preferences.

 

Whether you choose a conventional or VA loan, understanding the qualification requirements, payment structure, and step-by-step process will make your custom home journey smoother and more fulfilling. With the support of a trusted lender and careful planning, you can build the home you've always dreamed of.

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