Understanding the VA One-Time Close Construction Loan
Are you a veteran looking to build your dream home? The VA One-Time Close Construction Loan might be the perfect solution for you. This unique loan product is designed to simplify the process of financing the construction of a new home, combining both the construction and permanent financing into a single loan. Here's what you need to know:
What is a VA One-Time Close Construction Loan?
A VA One-Time Close Construction Loan is a single closing construction loan that allows veterans to finance the construction of a new home and convert it into a permanent mortgage once the construction is complete. This means you only have to go through the loan approval and closing process once, saving you time and money.
Key Features and Benefits:
Single Closing: The loan is closed prior to the start of construction, and the proceeds are disbursed to cover the cost of the land and construction. The remaining funds are placed into escrow and paid out to the builder during the construction phase.
Loan Structure: The loan moves from construction financing to permanent financing with one closing. The construction period is backed out of the loan term, and the borrower will start making principal and interest payments once the modification to permanent financing is completed.
Builder’s Warranty: The builder must provide the veteran with a 1-year warranty on VA Form 26-1859, Warranty of Completion of Construction. This ensures that any construction defects are covered for the first year.
Builder/Contractor Approval: The builder or contractor must be listed on the VA Registered Builders list and meet the Granite VA Contractor Review Requirements. This ensures that only qualified builders are involved in the construction process.
No Pre-Started Construction: For VA One-Time Close loans, construction cannot start prior to the submission of the loan. This ensures that the loan process is followed correctly from the beginning.
General Terms:
The fee for the loan is determined during the project approval period and is based on the hard cost of construction. Only VA loans will include this fee in the builder's budget.
The loan can be structured as a purchase or a refinance, providing flexibility depending on your needs.
Conclusion:
The VA One-Time Close Construction Loan is an excellent option for veterans looking to build their own home. With the convenience of a single closing and the security of a builder's warranty, this loan product simplifies the construction process and provides peace of mind. If you're considering building a new home, be sure to explore the benefits of the VA One-Time Close Construction Loan.
As a veteran myself, I know the challenges we face, and I’m committed to guiding you every step of the way to ensure your journey to building your dream home is smooth and stress-free.
Send me a DM or text me at 903-300-6861 for more info.
Jeff Robison, US Army
NMLS# 2434601
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