VA One-Time-Close Construction Loan: How it Works and Who Qualifies | Financial Suit Team

Introduction:

A VA one-time-close construction loan is a type of mortgage that allows eligible veterans and service members to finance both the construction of their new home and the permanent mortgage in one loan. This loan program is specifically designed to help veterans and service members build their dream homes without having to worry about multiple loans or multiple sets of closing costs.

How Does a VA One-Time-Close Construction Loan Work?

With a VA one-time-close construction loan, borrowers can secure financing for the construction of their home and the permanent mortgage all in one loan. The loan provides funds to the borrower to pay for the construction costs and then converts to a permanent mortgage once the construction is complete. During the construction phase, the borrower makes interest-only payments on the loan, based on the amount of money that has been disbursed to the builder. Once construction is complete, the loan is converted to a permanent mortgage, and the borrower begins making regular principal and interest payments.

Benefits of a VA One-Time-Close Construction Loan

One of the biggest benefits of a VA one-time-close construction loan is that it eliminates the need for multiple loans and multiple sets of closing costs, which can save borrowers a significant amount of time and money. In addition, VA loans typically offer lower interest rates and more flexible qualification requirements than other types of mortgages. This loan program also allows borrowers to build a home that meets their specific needs and preferences, instead of settling for an existing home that may not have all the features they want.

Eligibility for a VA One-Time-Close Construction Loan

To be eligible for a VA one-time-close construction loan, borrowers must be:

• A veteran who has served on active duty and has been discharged under conditions other than dishonorable

• A current active-duty service member with at least 90 days of continuous service

• A National Guard or Reserve member who has completed at least six years of service

• A surviving spouse of a veteran who died on active duty or because of a service-connected disability.

Borrowers must also meet certain credit and income requirements to be approved for the loan.

Credit and Income Requirements for a VA One-Time-Close Construction Loan

To be approved for a VA one-time-close construction loan, borrowers must have a minimum credit score of 620 and a debt-to-income (DTI) ratio of 50% or less, which means that their monthly debt payments cannot exceed 50% of their gross monthly income. However, VA loans typically offer more flexibility in the DTI ratio and other qualification requirements.

Application Process for a VA One-Time-Close Construction Loan

To apply for a VA one-time-close construction loan, borrowers should work with a VA-approved lender who can guide them through the process and help them understand the eligibility requirements and qualification criteria. Borrowers will need to provide documentation such as proof of income, employment, and credit history, as well as a detailed construction plan and cost estimate. Once the loan is approved, the borrower can begin construction on their new home.

Expert Guidance for VA Loans

VA loans are a remarkable option for many veterans but can be complex. An experienced VA mortgage professional can help you comprehend and guide you through the process. Working with The Financial Suit’s team of expert mortgage professionals can significantly enhance your VA loan experience.

We also have a FREE “VA Loan Guide” to assist you on your path to homeownership. Click the picture below to download your copy and unravel the VA loan process today.

Conclusion

A VA one-time-close construction loan can be a great option for eligible veterans and service members who want to build their dream homes without having to worry about multiple loans or multiple sets of closing costs. With lower interest rates and more flexible qualification requirements than other types of mortgages, these loans can help make homeownership more affordable and accessible for those who have served our country. If you are eligible for a VA one-time-close construction loan, reach out to the Financial Suit team - mortgage professional to learn more about this loan option and begin the application process.