Build Your Home

What is an FHA One Time Close (OTC) Construction Loan?

The FHA OTC Construction loan is a popular option for building single-family homes because it offers financing that is easier to qualify for and an overall process that makes paying for and building your home simpler to manage.

Because these loans are government-backed by the FHA, interest rates are kept competitively low and borrowers can make a minimum down payment of only 3.5%.

With an FHA OTC 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. This streamlines the process, allowing you to close on your home loan once, rather than having to secure two or more separate loans for each stage of the process.

How to Get an FHA OTC Construction Loan

If you'd like to see whether you qualify for an FHA OTC 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 an FHA OTC 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 either currently own or will purchase a lot on which your property will be built.

We'll also work with you and your general contractor 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.

Loan Requirements to Meet

These are some of the standard requirements often needed to qualify for an FHA OTC Construction loan. If you have questions about these requirements, we're here to help.

• You need to be purchasing the land you will build on at closing (or currently own the land).
• In most cases, it's best to have a credit score of 640 or higher.
• You need a minimum down payment of 3.5%, as there is a 96.5% minimum Loan-to-Value (LTV) ratio for FHA loans.
• You must have a contract with a licensed general contractor who will build the home.
• An appraisal will need to be done to assess the value of the project.
• The funds from the loan must be placed in an escrow account that will be disbursed to cover construction costs.

FHA OTC Construction Loan FAQs

Financing the build and long-term mortgage of your new home is an important step to 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. Feel free to join our official group for even more answers!

What is a USDA One Time Close (OTC) Construction Loan?

Financing a home in a rural area involves unique considerations. To make it easier for homebuyers to finance homes and increase economic development in rural areas, the United States Department of Agriculture (USDA) provides the USDA OTC Construction loan.

With a USDA OTC 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.

This streamlines the process, allowing you to close on your home loan once, rather than having to secure two or more separate loans for each stage of the process. The USDA OTC Construction loan in particular also has a competitive interest rate and no down payment requirement, making it a popular option for rural construction projects.

How to Get a USDA OTC Construction Loan

If you'd like to see whether you qualify for a USDA OTC 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 USDA OTC 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. We'll also work with you and your builder to determine what the cost and timeline will be to build your home and finance it.

Loan Requirements to Meet

These are some of the standard requirements often needed to qualify for a USDA OTC Construction loan. If you have questions about these requirements, we're here to help.

• You need to live (or be building a home) in an eligible rural area as designated by the USDA.
• In most cases, it's best to have a credit score of 640 or higher. With higher credit scores often comes better interest rates.
• The USDA and the lender must approve any contractors that will be used.
• Contractors must have appropriate liability insurance, have an active license, and have at least two years of experience constructing family homes.
• An appraisal will need to be done to assess the value of the project.

USDA OTC Construction Loan 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. Feel free to join our official group for even more answers!

What is a Fannie Mae One Time Close (OTC) Construction Loan?

The Fannie Mae OTC Construction loan is a popular option for building new single-family homes. It offers financing that is easier to qualify for and an overall process that makes paying for and building your home simpler to manage.

With a Fannie Mae OTC 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.

Fannie Mae OTC Construction loans are insured by the Federal National Mortgage Association, commonly known as Fannie Mae. Because these loans are backed by Fannie Mae, interest rates are kept competitively low and borrowers can make a minimum down payment as low as 5%.

Fannie Mae allows borrowers to lock in interest rates prior to closing, while also allowing them to adjust to the lowest interest rate available during the construction process when converting to a long-term mortgage.

How to Get a Fannie Mae OTC Construction Loan

If you'd like to see whether you qualify for a Fannie Mae OTC 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 Fannie Mae OTC 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 either currently own or will purchase a lot on which your property will be built.

We'll also work with you and your builder to determine what the cost and timeline will be to build your home and finance it.

Loan Requirements to Meet

These are some of the standard requirements often needed to qualify for a Fannie Mae OTC Construction loan. If you have questions about these requirements, we're here to help.

• You need to purchase the land you will build on at closing (or currently own the land).
• The home you want to build needs to be an eligible site-built single-family, modular, or manufactured home.
• In most cases, it's best to have a credit score of 680 or higher.
• Fannie Mae and the lender must approve contractors that will be used.
• An appraisal will need to be done to assess the value of the project.
• The transaction from construction to a permanent home and loan may not exceed 12 months.

Fannie Mae OTC Construction Loan 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. Feel free to join our official group for even more answers!

Coming Soon

Connect with us to see if your project can qualify for this program!