Why choose a one-time close construction loan and what options are available to you?
A one-time close construction loan is a viable option for borrowers when they need to provide the builder with initial and interim financing for construction. This product has a single closing to save you on closing costs from having multiple closings. As a local broker, we have a few different options available to our clients who are interested in pursuing building a home.
FHA ONE-TIME CLOSE
- 620 Minimum Credit Score
- 5% Down Payment (1.5% Down Payment option with a 2% down payment assistance grant *additional requirements may apply during underwriting)
- Borrower approval in Underwriting System (appropriate verification of income, assets, liabilities etc. will apply)
USDA ONE-TIME CLOSE
- 640 Minimum Credit Score
- No Minimum Down Payment is required, 100% Financing per USDA loan limits
- Property and Borrower are subject to additional approval eligibility requirements per USDA guidelines
VA ONE-TIME CLOSE
- 620 Minimum Credit Score
- No Minimum Down is required, 100% Financing per VA loan limits
- Borrower is subject to additional approval eligibility requirements per VA guidelines
≤ 20% Down Payment – Conventional ONE-TIME CLOSE
- 680 Minimum Credit Score (for as little as 5% down payment options)
- 720 Minimum Credit Score (for as little as 3% down payment options)
- Borrower Approval in Underwriting System (appropriate verification of income, assets, liabilities etc. will apply)
≥ 20% Down Payment/Available Land Equity ONE-TIME CLOSE
- 680 Minimum Credit Score
- 20% Down Payment or 20% Equity Availability
- 10% of Total Loan Acquisition Reserve Requirement
- Borrower Approval in Underwriting System (appropriate verification of income, assets, liabilities etc. will apply)
With these options to choose from, there are a few key factors to keep in mind as well. For options of:
≤ 20% down payments the builder is required to have a recent referral base of three (3) recent builds. Before we are even able to move forward with underwriting the builder needs to be approved and vetted by the lender. A max disbursement of $150,000 on the day of closing is allowed to pay for the land, land payoff, or modular/manufactured distributor payment.
≥ 20% down payments the builder is only required to have one recent build/referral and only the plans are required upon submission to the lender.
Eligible Construction Types
- NEW manufactured construction
- NEW modular construction
- NEW Site/Stick Built
- Primary Residence
- Secondary Homes (additional underwriter approval items may be required)
**Cannot GC your own loan**
**There can be no existing structure or foundation on the land**
**No Self-Help is permitted with the GC for credits**
DO NOT START ANY WORK PRIOR TO CLOSING
As with any mortgage program, this article covers the bare basics of the one-time close construction loans available and the very basic items to keep in mind when looking into these options. Please call me to go into depth and ask any questions you may have to move forward with a One-Time Close construction loan.
Ashley Socquet
Office: 844.788.7237 x7627
Email: Ashley@northeast-mortgage.com
