VA Single Close Construction Loans
VA Single Close Construction Advantages
- Unique benefits for people with ties to the military
- One loan for construction and home financing
- Qualifying once reduces funding risks
- No down payment required
- Low interest rates
- Fixed 30-year loan
- Payments don’t need to be made during construction
You want to build your own home but, like many people, you might be unsure where to start.
As a veteran or active-duty service member, your VA benefits keep it simple. They extend beyond traditional purchase loans with options to finance building and affording the home you’ve been imagining.
A VA single close construction loan allows you to build your home using the benefits you’ve earned. Save time and money through a simplified financing process with no down payment needed and a single loan for both the construction and long-term mortgage of your new home.
What is a VA Single Close Construction Loan?
The Veterans Administration single close construction loan is a popular option for veterans or those with other military involvement. It offers financing that is easy to qualify for and an overall process that makes paying for and building your home simpler to manage.
The U.S. Department of Veterans Affairs (VA) insures VA single close construction loans to make financing more attainable to benefit those who have ties to the military.
Because these loans are government-backed by the VA, interest rates are kept competitively low and borrowers aren’t required to make a down payment.
With a VA single close construction loan, you can finance the purchase of your lot, the construction of your new home, and the long-term mortgage that will be needed to afford your home once it’s built.
The streamlined process allows you to close on your home loan once rather than having to secure two or more separate loans for each stage of the process.
You qualify once and have a single appraisal, loan originator, and closing process. This reduces the time it takes to build and move into your new home, protects you from unforeseen circumstances down the road, and saves you from paying double or triple closing costs.
Home construction is complicated and requires many moving parts. Single close construction loans are made to help simplify the process.
How Do Single Close Construction Loans Work?
If you’d like to see whether you qualify for a single close construction loan, connect with us. To get you started, we’ve outlined the steps needed and loan programs available to help you understand the process.
The Single Close Construction Financing Process
Get in touch with us to see if we can start the process to finance the construction of your new home.
- Choose a builder: Find a reputable builder in your area who meets eligibility requirements for financing, including 3 years minimum experience building residential homes, a minimum of $1 million per year in volume, and that their primary business is building residential homes.
- Prepare a contract: We’ll work with you as you prepare a contract with your builder to determine if the home is within your budget and what the cost and timeline will be to build your home and finance it.
- Begin the loan process: Once you review and sign the contract, it will be evaluated by our construction underwriting team. Signing the contract and providing needed documentation usually take only a few days.
- Underwrite the loan: Our underwriting team will evaluate and potentially approve the loan for the construction process, as well as the permanent portion of the loan in one single step.
- Close the loan: With a final review of all the financial information you submitted, including documentation of current income and financial liabilities, you can sign the paperwork to close on your loan and secure financing.
- Begin construction: You’ll begin construction on your new home within 30 days of the closing date. Your construction team will provide you with regular updates on the progress of your home. We’ll manage the construction phase, including ordering draw inspections and any state-required surveys and inspections.
Partnership Guidelines
Review our requirements and descriptions of the lending choices available to our partners.
How to Get a VA Single Close Construction Loan
If you’d like to see whether you qualify for a VA single close construction loan, connect with us. To get you started, we’ve outlined the steps and qualifications needed to help you understand the process.
The Financing Process
By sharing basic information about the home you want to build, we’ll work with you to see if a VA single close construction loan meets your needs and whether you can get pre-approved for the loan.
Next, we’ll begin a more in-depth underwriting process to review your income, credit, ability to repay the loan, and other eligibility requirements. This will include demonstrating proof that you’re eligible for VA benefits, either because you’re a veteran, active member of the armed services, or qualifying spouse.
We’ll also work with you to ensure your builder is registered through the VA site, as well as to determine what the cost and timeline will be to build your home and finance it.
We’re with you through each step, leading to a simple and efficient closing so that you can move forward with building your home.
Once the loan closes, you’ll begin construction on your new home within 30 days of the closing date. Your construction team will provide you with regular updates on the progress of your home. We’ll manage the construction phase, including ordering draw inspections, any state-required surveys and inspections, and VA requirements.
Loan Requirements to Meet
These are some of the standard requirements often needed to qualify for a VA single close construction loan. If you have questions about these requirements, we’re here to help.
- You need to be an eligible veteran, spouse, or be on active duty with the United States military.
- In most cases, it’s best to have a credit score of 640 or higher.
- The Lender must approve the builder.
- Contractors must be registered with the VA.
- An appraisal will need to be done to assess the value of the project.
- All standard guidelines for traditional VA loans will also apply to the single close construction loan.
VA Single Close Construction Loans FAQs
Financing the build and long-term mortgage of your new home is an important step in beginning this process. It’s ok to have questions. We’ve compiled answers to the frequently asked ones, but don’t hesitate to ask more.
How do I know if I’m eligible for a VA single close construction loan?
Like traditional VA loans, VA single close construction loan eligibility is service-based. For eligibility, the VA will consider factors including your service status, years of service, and service record.
You may meet eligibility requirements if you are a current active duty military service member, military veteran, or the spouse (including surviving spouse) of a service member.
Eligibility is proven through a Certificate of Eligibility (CoE) from the U.S. Department of Veterans Affairs. We can help you apply for a CoE or you can apply for it directly through the VA’s benefits portal online or by mail.
How do VA single close construction loan interest rates compare to other construction loans?
Because VA single close construction loans are backed by the U.S. Department of Veterans Affairs, their interest rates are kept competitively low without requiring borrowers to have a down payment and high credit score.
Interest rates for all single close construction loans vary based on a variety of factors including your income and finances, credit score, the location where you want to build, and loan amount.
To know what interest rate your situation would qualify for, get in touch with one of our loan advisors for more specific information.
How do VA single close construction loan interest rates compare to other construction loans?
ButtonBecause VA single close construction loans are backed by the U.S. Department of Veterans Affairs, their interest rates are kept competitively low without requiring borrowers to have a down payment and high credit score.
Interest rates for all single close construction loans vary based on a variety of factors including your income and finances, credit score, the location where you want to build, and loan amount.
To know what interest rate your situation would qualify for, get in touch with one of our loan advisors for more specific information.
What other loan options are there besides a VA single close construction loan?
A VA single close construction loan is only one of the many options for those who are interested in building their own home.
Some additional options you might want to consider include other specialized construction loans. A USDA loan might work well for building a home in a rural area, and it also allows for a 0% down payment.
If you don’t have ties to the military, an FHA loan might work well for building a home, or there are Fannie Mae construction loans designed for people with low-to-moderate-income levels.
We can help you determine what loan program is best for your situation.
What costs are required to close a VA single close construction loan?
There are closing costs associated with processing any loan, and the costs of a single close construction loan are comparable to standard VA mortgages. They include costs for the lender to service the loan, as well as an appraisal and other fees.
With a single close loan, you only pay closing costs once and your closing package includes a single promissory note and one deed.
This is a unique benefit that many other financing options for home building don’t offer. With other loan types, borrowers often need two or more loans to finance the actual build and their long-term mortgage, meaning they pay closing costs for each of those loans.
How does my lender get involved with the construction of my new home?
We have an in-house single close construction management team. Using our years of experience and home-building expertise, our experts will review and approve documentation from every stage of construction; this includes project budget and timeline, planning and specifications, permits and inspection, and building code best practices.
At the start, you’ll want to find and engage the builder of your choice as long as they’re registered with the VA. Our builder vetting process ensures that all builders accepted into our program have a sterling record of on-time completion for their home projects. Quality, safety, and efficiency are top priorities.
Our team will help keep your project on track every step of the way. This allows potential problems to be dealt with before they can turn into major delays.
Our completely hands-free building process means you never need to worry about applying for draws or arranging inspections as your construction takes shape. It is all handled for you.
