One-Time-Close Construction Loans

Keith Byrd

One-Time-Close Construction Loans

If you are looking for financing to build your new home, you may not know where to start. It can be a headache to deal with the different stages of a tradition construction loan: the “pre-approval” or “commitment” stage, the “interim lending” stage, and the “permanent loan” stages. This is where the One-Time-Close option comes in. With a One-Time-Close construction loan, those three stages are combined into one single process. With this type of transaction, the borrower is able to obtain permanent loan approval, as well as close the interim and permanent loan transaction before construction begins, all in one single transaction.

Loan Requirements

Credit

  • FHA: Minimum 530 FICO (limits to LTV/CLTV may apply)
  • VA: Minimum 530 FICO & Including No Score
  • Conventional: Minimum 700 FICO (limits to LTV/CLTV may apply)
  • Full tri-merged credit report with scores—Credit report valid for 90 days

Loan Term

  • Fixed Rate Mortgage (FRM): 10—30 year terms

Max LTV

  • FHA: 580+ FICO and No Score: 96.5% LTV calculated per FHA Guides
    < 580 FICO: Maximum 90% LTV
  • VA: 100% LTV plus VA funding fee
  • Conventional: 70% LTV Maximum

Occupancy

  • FHA & VA: Owner Occupied Only
  • Conventional: 1 Unit Owner Occupied, 1 Unit Second Home

Property Eligibility

  • FHA
    • New Construction: Modular (off-frame only), Manufactured (double-wide or larger), and Traditional Construction.
    • Manufactured Homes: Engineer must certify foundation plans meet FHA guides. Must be titles as real property or have recorded affixation affidavit.
    • Loan may include simultaneous purchase of the land/lot or loan can be guaranteed for the construction of home on land/lot already owned by borrower.
  • VA
    • New Construction: 1 Unit Residential Property, Condominiums, Manufactured (double-wide or larger), and Modular Homes.
    • Condominium: Project must be acceptable/approved by VA.
    • Manufactured Homes (off frame only): Must meet all MPR-related requirements for proposed or under construction per VA Guides. Manufactured Homes can be new or used, however used Manufactured Homes to be moved to purchaser’s lot to be affixed to permanent foundation require additional inspections.
    • Loan may include simultaneous purchase of the land/lot or loan can be guaranteed for the construction of home on land/lot already owned by veteran.
  • Conventional
    • Single-Family-Detached, Modular (off frame only), and Manufactured. No Co-ops.
    • Manufactured Homes: Property may not have been currently installed prior to subject lot.

Credit History

  • FHA: Borrowers with traditional credit histories and credit scores will be underwritten on their own merits. Non-traditional and derogatory credit history considered.
  • VA: Borrowers with credit scores will be reviewed based on existing credit history. Borrowers with no score must provide alternative credit references.

Fees the Builder Must Pay

  • On a VA construction / permanent home loan, the builder is responsible for:
    • Interest payments during the construction period
    • All Fees normally paid by a builder who obtains an interim construction loan. This includes, but is not limited to:
      • Inspection fees and re-inspection fees
      • Title update fees
      • Construction loan fees
  • On an FHA construction/permanent home loan, the builder is TYPICALLY (though not required) responsible for the fees listed above.

Fees the Borrower Can Pay

  • FHA: The borrower may pay any fees and construction interest. A specific agreement between Borrower and Builder as to the responsible party for fees and interest is required.
  • VA: The veteran may not pay any fees that are the builder’s responsibility.

Additional Information

  • Conventional
    • All contracts must be fixed price.
    • Payments during construction will be based on the outstanding drawn balance and will be drawn from interest reserve if applicable, otherwise payment will be due.
  • Maximum 12-month construction period.
  • Maximum of 9 draws; Local inspections make for an easy draw process.
  • Payment automatically converts from Interest Only to Fully Amortizing payment after construction.
  • Investment properties, jumbo loan amounts, spec builds, & self builds not available with the 1x-close construction program; these options are available with the 2x-close (traditional) construction program (call or email for more info).