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VA One-Time-Close/OTC Construction Loans
You Served, You Earned It!
The Zero-Down Payment One-Time-Close/OTC Mortgage for our Veterans and Current Military Personnel
VA One-Time-Close/OTC/Single Close Construction Loan Program Benefits
- The no money down VA OTC Construction Loan program allows VA eligible borrowers to create one loan amount, to purchase a lot, provide interim construction financing, wrapped into one permanent loan
- No need to requalify for a permanent loan, upon completion of the construction phase of the project
- $0 down required, allowing first-time homebuyer and current homeowners an affordable option to build their own custom home
- No Monthly Mortgage Insurance or PMI, saving you thousands over the life of the loan
- Flexible credit requirements, with credit scores down to 620
- Safe, secure 30 Year fixed rate mortgage
- With Builder/Retailer help, no out-of-pocket closing costs
- Most property types allowed
VA Construction Loan Qualification Requirements
- Constructions must be completed in nine months
- A third-party VA Approved Builder must be selected for the project
- Borrower must be able to obtain a Certificate of Eligibility from the VA
- All Veterans on the loan must have a minimum 620 middle credit score
- No foreclosure or short-sales permitted within the last 2 years
- No Chapter 7 bankruptcies within the last year
- No manual Underwrite. Loan approval level must be an Approve/Eligible
Everyone Wins with a VA One-Time-Close Loan:
- Borrowers:
- With a VA OTC Loan, unlike a traditional two-step construction loan, the borrower doesn’t need to re-qualify for the loan upon completion of the construction. With no need to re-qualify for the loan there is no need for reverification of credit, income, assets, or the appraised value of the property
- With a single close the borrower only qualifies for a mortgage loan once Vs. three separate times as required with a traditional construction-to-perm loan. With a typical two-time construction loan, the borrower must qualify for the construction loan, the take-out loan, and when the home is almost completed as the original borrower documentation and credit reports have expired
- With a VA OTC Loan, unlike a traditional Construction-To-Perm loan, borrowers eliminate the cost of refinancing their interim financing loan
- Interest rate is locked prior to the loan closing, for the life of the loan; thus eliminating interest rate risk
- No mortgage payments during the construction period
- The loan is fully in place prior to construction
- Contractors, Builders, Retailers:
- Obtain the security of knowing that the borrower’s permanent loan will not only be approved, but is closed on prior to starting construction
- The Builder/Retailer can obtain staged funded draws without having to draw on their own credit lines, thus eliminating their interest costs
- Typical draw amounts allowed are:
- No draw option available for all property types, provided the Builder/Retailer agrees to receive all funds upon the completion of the home
- 3 draws for manufactured/modular housing
- Funds can be released for the payoff of the manufactured/modular home once offline. Certain restriction apply
- 5 draws for stick built
- Expand the pool of eligible customers, that don’t have the 10 to 20% down, that is typically required on a Construction-To-Perm project
- Builders no longer use their credit lines to fund a construction project
Talk to a VA OTC Construction Mortgage Expert
Not ready to apply online? No problem.
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Answer a few questions, and a VA OTC Construction Home Loan Mortgage Expert will call you back.
