VA One-Time Close Construction Loan: Build Your Dream Home with One Powerful Loan

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What Is A VA One-Time Close Construction Loan?

A VA One-Time Close Construction Loan allows eligible veterans, active-duty service members, and qualifying surviving spouses to finance the construction of a new home and the permanent VA mortgage with a single loan and one closing.

Unlike traditional construction loans that require two separate closings, this VA-backed option combines the land purchase (or land payoff), construction costs, and long-term mortgage into one streamlined process. The loan converts automatically to a permanent VA mortgage once construction is complete, with no second closing required.

Key advantages of a VA One-Time Close Construction Loan include:

  • One loan, one closing
  • No down payment required for most qualified veterans
  • Competitive VA interest rates
  • No private mortgage insurance (PMI)
  • Simplified construction-to-permanent financing

This program is designed for veterans who want to build a custom home while minimizing closing costs, interest-rate risk, and complexity.

On the record

Our leadership answers the questions veterans ask most

No scripts, no call center. Our CEO puts the real questions to the people who close these loans — in their own voices.

Garrett Puckett, Founder & CEO of Security America Mortgage, NMLS #337550
Garrett Puckett, Founder & CEO — asks

"What makes doing a VA one-time close construction loan with Security America different from another lender you'd find online?"

The answer

0:00 / 0:00
Jason Noble, Senior Loan Officer & COO, VA Construction Loan Specialist at Security America Mortgage
Jason Noble Senior Loan Officer & COO · VA Construction Loan Specialist · Security America Mortgage

Key takeaways

  • Security America has specialized in VA one-time close construction loans for close to a decade, so the team knows the program's ins and outs and how to steer veterans around the mistakes that trip up less experienced lenders.
  • These loans are handled by a trained team that does them every day — they know what works, what to do, and what to ask for — not a general lender treating it as a side product.
  • That expertise extends to the builder: Jason and the team educate builders on how the program works and what's required, keeping the veteran–builder relationship clear throughout the build.
Read a summary of Jason's answer
Summary of Jason's answer

Plenty of lenders claim to offer VA construction loans, Jason explains, but few actually close them regularly. What sets Security America apart comes down to knowledge and expertise: the team has focused on VA one-time close construction loans for close to ten years and knows the program well enough to guide veterans around the mistakes and pitfalls that catch less experienced lenders.

That experience runs through the whole team and extends to the builder side — Jason and his colleagues walk builders through how the program works and what's required of them, so the relationship between the veteran and the builder stays clear from the first draw to the last. His bottom line: with a lender that handles these loans every day, the process is simply easier than it is with a general lender found online.

VA One-Time Close

Benefits of the VA One-Time Close Construction Loan

1

0% Down Payment

Qualified borrowers can finance 100% of construction costs and the home’s land with no down payment required.

2

One-Time Closing

Borrowers close once at the beginning of the process. There is no re-qualification and no second round of closing costs after construction is complete.

3

Competitive Rates of Interest

Interest rates are locked in before construction begins, protecting borrowers from market fluctuations during the build.

4

No Private Mortgage Insurance (PMI)

VA loans do not require PMI, which can save borrowers hundreds of dollars per month compared to conventional loans.

5

Flexible Credit Guidelines

VA loans offer more flexible credit standards than many other loan programs. While requirements vary by lender, a 620 FICO score is often sufficient to qualify. Borrowers exploring alternatives may also consider an FHA loan .

6

Fully Covers Lot Purchase & Construction

If you already own a lot, existing equity can be rolled into the loan. For borrowers without land, the VA One-Time Close loan allows both land purchase and construction to be financed together.

VA One-Time Close Construction Loan

Our VA OTC Product Specifications


📋

Loan Structure

Single Close
Loan-to-Value
100% LTV / CLTV / HCLTV for veterans with full VA entitlement
Down Payment
$0 down with full VA entitlement — land and construction cost both covered
Closing Structure
Single closing — rate locked at closing and held through the permanent mortgage
Construction Period
11-month maximum — income, credit, and asset documents must be dated within 12 months of construction completion
Loan Conversion
Automatic modification into permanent VA mortgage at construction completion — recorded by us as the lender, not the title company
Payments During Build
None — no mortgage payments required during the construction period
💰

Payment Structure During Construction

Builder-Paid Items

You do not make any mortgage payments during construction. Interest that accrues during the construction period is a builder-paid item that we require to be included in your total project budget, alongside the following required items:

Interest Payments During Construction Includes a 20% cushion built in to account for rate movement or timeline extension during the build
Property Insurance During Construction Builder's risk insurance covering the full project from groundbreaking through certificate of occupancy
Construction Inspection Fee Draw inspections completed at each milestone to verify work before funds are released from escrow
Construction Draw Fee Administrative fee associated with each draw disbursement from the construction escrow account
Land-Only Property Taxes During Construction (Optional) If not budgeted in the contract, you are responsible for paying these directly during the construction period

Builder contract requirement: Your builder must include all required builder-paid items in the project budget and construction contract before we can approve the loan. This is a condition of underwriting approval — not a post-closing item.

⚠️

Required Contingency

Mandatory
5%
Mandatory Contingency on Total Cost of Improvements Every VA OTC project budget must include a 5% contingency. This protects both you and us against construction cost overruns during the build. Our team ensures this contingency is collected as part of the loan structure.

How it works: The contingency is calculated on the total cost of improvements — not the land. It is held in reserve within the construction escrow and released only if actual construction costs exceed the base contract amount. Unused contingency funds are applied to reduce the permanent loan balance at conversion.

VA One-Time Close Construction Loan

Who Is Eligible for a
VA One-Time Close Construction Loan?


🍸

Service Eligibility

Veteran with honorable or general (under honorable conditions) discharge

Active duty service member with 90 or more continuous days of service

National Guard or Reserve member with 6 or more years of qualifying service

Qualifying surviving spouse of a service member who died in service or from a service-connected disability

Split entitlement eligible for married veterans only

📊

Credit and Income Requirements

640 Minimum

640 minimum credit score — Security America Mortgage requires 640 for all VA construction loans

Sufficient income to meet VA residual income guidelines

Debt-to-income ratio meeting program guidelines

Two-year employment history — with allowances for active duty service, recent veteran status, or educational transitions

Documentation valid for 180 days — extended from the standard 120-day window; this is the VA guideline for new construction that applies to OTC loans

🏠

Property Requirements

The home must be built as your primary residence

Fully approved construction plan and budget with 5% contingency included

Property must meet VA Minimum Property Requirements at certificate of occupancy

Foundation cannot have been completed before loan closing — if already completed, the file must be escalated for further review and may not qualify as a true OTC loan

⚖️

DTI Calculation Rules

Your Current Housing Situation
Included in DTI?
Currently renting primary residence
Not included
Currently own primary residence
PITIA included
Selling primary residence at or before closing
PITIA excluded
⚠️

Additional Restrictions

Read Before Applying

Escrow waiver required. An escrow waiver for property taxes and property insurance is required on our OTC product. After construction, you handle these payments directly rather than through a mortgage escrow account.

No temporary rate buydowns are permitted on our OTC product

Cannot pay off non-mortgage or mortgage debt associated with another property at closing

No cash back from loan proceeds — the only exceptions are refunds of your Earnest Money Deposit or Sales Contract Deposit paid in cash outside the transaction

Broker loans only — correspondent loans are not eligible for our OTC product

VA One-Time Close

How the VA One-Time Close Construction Loan Process Works

The VA One-Time Close Construction Loan follows a structured process designed to protect both the veteran and the lender while keeping the transaction as simple and efficient as possible.

Here’s how the process typically works:

1

Pre-Approval

The borrower completes a VA loan pre-approval, including a review of income, credit, and Certificate of Eligibility (COE). This step helps determine eligibility and estimated borrowing power before moving forward. Obtain your COE.

2

Builder Approval

The selected builder must be approved to construct VA-financed homes and meet all VA construction guidelines. Working with VA-approved builders and experienced VA construction loan lenders helps ensure the project stays compliant and on schedule.

3

Loan Closing

The construction loan and permanent VA mortgage close at the same time, before construction begins. This is why it’s called a one-time close construction loan, eliminating the need for multiple closings.

4

Construction Phase

Funds are disbursed to the builder in stages as construction progresses, based on approved draw schedules. This process protects both the borrower and lender while keeping the project on track.

5

Final Inspection & Conversion

Once construction is complete and the VA final inspection is approved, the loan automatically converts to a permanent VA loan with no second closing or refinancing required. Learn more about VA loans.

This one-time close structure helps veterans avoid rate changes, duplicate fees, and unnecessary delays while simplifying the path to building a new home with VA loan benefits.

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

The VA OTC loan combines the funds for building the home, purchasing the land, and converting into a standard mortgage, simplifying the overall process. The loan is approved by a lender on the basis of plans for construction, and the value of the finished home. After you close, funds are released to your builder in stages (draws) as your home progresses.

Payments on the loan are not required during the construction phase, which takes pressure off your cash flow during the build. Once construction is finished, you start making mortgage payments on what’s termed a fixed-rate mortgage.

Who Qualifies for a VA OTC Loan?

To be eligible for a VA One-Time Close Construction Loan, you must:

  • Have a valid Certificate of Eligibility (COE) from the VA.
  • Meet credit score requirements, typically 620 or higher.
  • Maintain a stable income and meet residual income standards.
  • Have a DTI (debt-to-income) ratio below 41%, although exceptions may apply with higher residual income.
  • Build a primary residence only VA loans cannot be used for investment or vacation properties.
  • Use a VA-registered builder with a valid VA Builder ID.

Property Types Eligible Under VA Construction Loans

VA construction loans can be used to erect:

Note: Condos and multi-family residences may require further approval and may not be listed for OTC loans.

Comparison

VA One-Time Close vs Two-Time Close Construction Loans

Understanding the difference between one-time and two-time close construction loans can help veterans choose the right financing option.

Feature VA One-Time Close Two-Time Close
Number of Closings One Two
Interest Rate Risk Locked upfront Subject to change
Closing Costs Paid once Paid twice
Loan Complexity Simpler More complex
VA Benefits Fully applied Often limited
For most veterans, a VA One-Time Close Construction Loan provides greater cost certainty and a smoother overall experience.

Common Questions About VA One-Time Close Loans

Can I build on land I already own?

Ans: Yes. Equity in land can be rolled into the VA OTC loan.

Can I use any builder?

Ans: Only VA-registered builders are allowed. Have your lender verify or register your builder.

Do I make mortgage payments during construction?

Ans: No Payments start only after the house is completed.

Can I refinance later?

Ans: Yes. You may be eligible for VA Streamline Refinance (IRRRL) no prequalify for lower interest rates in the future.

VA One-Time Close

Why Choose Security America Mortgage?

We at Security America Mortgage focus on VA One-Time Close Construction Loans, and this is one of the many standard fitting loans and benefits we bring to market for veterans:

  • 0% down payment options
  • Competitive interest rates
  • Flexible credit guidelines
  • Hands-on support from expert loan officers
With zero stress, and all the help. From applying for a COE to selecting a VA-accepted builder, we have you covered at every stop.

Final Thoughts

This is where the VA One-Time Close construction loan can really shine. One of the most attractive programs for military families is this zero down payment, single closing, and government backed mortgage that is also backed by the Department of Veterans Affairs.

Don’t wait if you’re eligible and have been dreaming of a custom home. Start building the future you want with a VA loan Fri Dec 14, 2025 Take the first step to fighting back against unexpected bills and investments now by signing up for a program that was made to thank you for your service.

By State

VA One-Time Close Construction Loans by State

Security America Mortgage provides VA One-Time Close Construction Loans for eligible veterans across multiple states. Each state has unique building requirements, VA considerations, and local approval standards.

We currently serve veterans in the following states:

To learn more about VA construction loan options and state-specific guidelines, select your state above to view detailed information.

VA One-Time Close Construction Loan FAQs

The interest rates on VA One-Time Close Construction Loans are highly competitive compared to traditional construction loans. In addition to this, you can avoid paying private mortgage insurance with a VA One-Time Close Construction Loan.

The process of obtaining a VA One-Time Close Construction Loan is pretty tricky. Rather than take on the process by yourself, you should enlist the help of a VA loan lender to help you through the application process. At Security America, our team of experts is willing to guide you through every step of the application process.

Mortgage payments on a VA One-Time Close Construction Loan have more competitive interest rates. You are not required to make repayments on your VA One-Time Close Construction Loan until the construction process is complete. Once the construction phase is complete, you do not have to re-qualify for a permanent loan.

A statement of service is a letter from your commanding officer detailing the status of your service and how long you have served. The statement of service is required to prove your eligibility for a VA loan and receive your certificate of eligibility.

With a VA One-Time Close Construction Loan, you can build a home for yourself and your family. VA One-Time Close Construction Loans are designed to help supply housing to veterans and combat the low housing supply. Unfortunately, VA one-time construction loans aren’t suitable for building million-dollar mansions.

Yes. Veterans may use land they already own or purchase land as part of the loan, provided the land meets VA requirements.

In most cases, borrowers do not make full mortgage payments during construction. Interest-only payments may apply depending on the loan structure.

They require additional documentation compared to standard VA loans, but many veterans qualify with proper planning and guidance.



Yes. VA One-Time Close Construction Loans are commonly used for custom-built homes, subject to VA and lender approval.

VA loan limits depend on entitlement and county guidelines. Many veterans can build with no down payment.

The loan budget must include contingency reserves. Cost overruns beyond approved limits may require borrower contribution or loan modification approval.

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All members of our team here at Security America Mortgage are experts when it comes to helping veterans obtain VA Home Loans. If you’re ready to get started complete the simple form above and one of our mortgage specialists will contact you shortly. We look forward to working with you!

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