Veterans who retire from military service, active duty service members, and members of the National Guard and Reserves often can qualify for VA Construction Loans to help them build and finance a home from beginning to end. The VA Construction Loan is also known as the VA One-Time Close Loan (OTC) for a reason. This type of loan product allows qualified borrowers the ability to construct their own homes utilizing an all-in-one lending product.
The VA One-Time Close Construction loan program delivers interim construction financing, land purchase (or payoff), and the permanent mortgage loan – all wrapped into one. A single loan offers both the construction loan and the permanent mortgage within a single loan closing. This type of loan also allows veterans to lock in their interest rate at the time of approval before construction begins, and this rate is good until it converts to a permanent loan.
Borrowers only need to qualify once. Instead of providing qualification documents such as pay stubs and tax returns twice, with this type of loan, veterans only have to prove that they can pay the construction loan and mortgage once.
Importantly, since conventional mortgage loan closing costs can be a significant expense to borrowers, the ability to just close one loan saves thousands of dollars having to close a second time. A traditional construction loan usually requires two sets of appraisals – by separate appraisers. With a one-time close construction loan, one appraisal saves the borrower money.
In summation, since the permanent loan is closed before construction begins, there is no need for re-qualifying for financing when it comes time to move on from construction to the permanent loan. This also means that there is no need for re-appraising, there’s only one underwriting process, and one set of closing costs. As such, this loan product provides interim construction financing, lot/land purchase or payoff, and the mortgage loan all in one.
In order to obtain this type of loan, qualifying veterans much follow this Loan Process:
- Make contact with VA Construction Loan Advisors to determine the best home loan for individual needs.
- Complete an application
- Receive a Pre-Approval Letter
- Select a builder that is then approved by the lender
- Determine where to build
- Create the Construction Contract
- Submit to your Loan Advisor
- Processing/Underwriting
- Appraisal
- Project Review
- Final Loan Approval
Other advantages of a VA Construction Loan include no down payment for qualifying veterans who have at least a 620 credit score, no required private mortgage insurance (PMI), 100% financing, low fixed rates locked for the life of the loan, and no mortgage payments while construction is ongoing.
As the VA does not lend directly, veterans need to find their own lender. HomeLander Mortgage is a one-stop-shop for all mortgage needs – including the VA Construction Loan. With so many advantages to this type of loan, HomeLander Mortgage can help and guide veterans every step of the way. Schedule a call to begin the process at www.homelandermortgage.com
