Everything You Want To Know Before You Build Your Next Manufactured, Modular or Site Built Home.
We Provide the Strongest Single Close Construction loan Programs of any 50 state bank, working 7 days a week around Your Schedule, Not Ours!
If you visited other websites looking for this type of loan, you would notice most start out with this one question: What is a one-time close construction loan?
Short answer, unlike any other loan it is a single close construction loan to cover your build costs and land/lot purchase into a straightforward loan, reducing the need to re-qualify for 3 separate loans. We go steps further than other banks by focusing on the more important aspects you want to know, like can and how will you get approved at a low attractive rate and term. As an FDIC Insured Bank, we lend on OTC construction loans in all 50 states.
This One-Time Close Construction Loan Guide is designed to provide the information you need to make the best possible decision on who you choose to handle your loan. We aim to take the small town bank approach with the more significant 50 state bank risk, especially on this property type.
We’re probably not the first company you found when starting your online loan search if it is, we’re lucky to have found each other first. Many lenders advertise for this type of construction loan who provide “not so great options” so let’s get right to it and first take a short test to see if you are in the right place.
Use These Links To Skip Ahead In The Guide:
First, Ask Yourself Are You Committed To The Process Of Building Your Own Home, Then Take This Short Quiz.
The One-Time Close Construction Loan is our most popular loan program requested, and we accept those who are committed to action.
Respond “YES” to Each Of the top 5 qualifiers, and you Are one-step closer to getting the best Single close Construction loan BuildBuyRefi has to offer.
Respond “NO” To Any Of These Statements, And You May Still Qualify!
(1). You’re Planning to Build On Land You Already Own, or Will Own At Time of Closing.
Whether you already own land or are searching for a plot of land to build your home on, the key is that you will own this land. If you already own land and it has a lien on it, we can pay off that lien and roll it into the loan, or we can put your land contract into the new construction loan before you put money down and close on it. The one-time close construction loan does not allow for you to build on land that you will not own, is owned by a friend or family member. There are cases where family members can gift you some land, but you have to make sure that this land is surveyed off separately and this is something we can help direct you to handle appropriately.
(2). You’re Looking To Build A Single Family Stick Built, Modular or Manufactured Home Only.
The single close construction loan only allows for a few property types, and those are single family site/stick built homes, doublewide or larger manufactured homes or modular homes. Property types that are not allowed are singlewides, condominiums, multi-unit property like duplexes or triplexes, not allowable for multiple units on one surveyed plot of land, and no log homes, bamboo homes, metal homes, tiny homes, storage container homes, earth contact homes or barndominimums. Anything outside of the traditional property types listed will not be accepted.
(3). You don’t have the 20% down-payment required From Traditional Construction Loans.
This product was created to bring more new home builds to the market for those that have been kept away by the significant 20% or more downpayment required by traditional construction lenders. Additionally, because we allow up to 100% financing on the USDA & VA programs, this keeps more money in your pocket and creates an opportunity that was not there originally. As well, you can use our FHA OTC construction loan to get up 96.5% financing with a small down payment, and all programs allow for varying degrees of seller contributions towards closing costs.
(4). You don’t want to risk having To re-qualify for three separate loans and pay three different Sets of closing costs.
The most significant risk of moving forward on traditional construction loans is the time and risk involved with three separate closings. The three closings are usually for your land, then your construction build-out, and then the final take-out loan to pay off the first two loans. Each time you are required to qualify for financing, terms, rates, closing costs, appraisals, and different underwriting guidelines. A lot can happen during this time such as job layoffs, increased debt from emergencies, or unforeseen circumstances that could keep you from qualifying along the way.
With the one-time close construction loan, you only qualify one time, lock your loan from the beginning, and do not have to risk the changing rate market or possible changes to loan guidelines. One of the most considerable advantages is no re-qualifying means once you close, you build your home, and everything is done, including a delay in payments while you’re under construction. Traditional constructions require you to start repaying the loan immediately, with the single close construction loan this is not the case. You can finance in the interest payments up until the build is complete.
(5). Your loan request is higher than $125,000.00
This requirement is due to the time, fees and costs involved with OTC construction loans. On RARE occasions we'll make an exception to this rule, but for the most part, low loan amounts usually only apply when purchasing a manufactured home due to the lower construction costs. To get to this amount you can include the purchase price of the land, the construction set up, and all fees and expenses associated with the one-time close construction loan.
Great, if you answered “YES” to each of these, you passed the first part of our pre-approval quiz. If you have a “NO” somewhere, then call us now, or take our eligibility checker to discuss your situation. Answering “NO” doesn’t mean you won’t qualify, it just means we need to find out which area is impacting your request. Keep scrolling to the next section to learn more about the BuildBuyRefi OTC loan.
First, There Are No Guarantee’s Because There Are Many Unknowns.
Anyone offering you a guarantee for the one-time close construction loan is probably someone you want to avoid. No loan closings are guaranteed until you've met all conditions and closed your loan. But let’s discuss further how you can get the results you desire.
If you want the build your New Home, then there’s a need for wicked fast speed, Commitment To The Process and Fast Action From You & Your Builder!
Applying and getting approved for a single close construction loan is only the first step in the process, it doesn’t guarantee you’ll get the rate, terms, or program were pre-approved for initially. Many factors go to achieving that low rate and great program you wanted, and that is “the speed in which YOU and your chosen builder move.” Time plays against every borrower in a big way with any loan.
Learn the 4 most-important reasons to “light the fire” and Take Fast Action on Your OTC Construction Loan Pre-Approval!
Rate Locks Expire: Most loans are locked for 30 days because the shorter term allows you to get the lowest rate possible. If you lose your rate lock by letting it expire or needing to extend it because you took weeks getting the items back, it will cost you more money or a higher rate. With rates recently on the rise, a higher price could even make you no longer eligible for the loan you wanted. A long delay could require you to re-qualify for the loan again.
Programs Could Disappear: It’s happened before, we’ve witnessed a whole host of loan programs get wiped out overnight. Investors can choose to change their risk portfolio and stop offering programs altogether, that is why moving fast on the approval you have in your hand means taking action.
Your Job or Income Status Could Change: What if you lost your job, your income was reduced, or you wanted to take a new job, but it put your loan closing in jeopardy because you took too long? Any of these changes in your employment status could come back with more unfavorable terms, or worse, a complete loan denial.
Your Credit Score Could Dramatically Change: We’ve seen this happen so many times before, a borrower maxes out their credit card for business, or they miss a payment because they weren’t paying attention, or judgment/collection was filed for any number of reasons. Not closing quickly under the same credit terms is another reason for underwriters to require you to re-qualify or cancel the loan.
Follow these three steps to Get the lowest OTC construction Loan rates possible today.
Find a lender you feel confident in and apply to get pre-qualified from that lender. Make sure the lender has the program you want, and if you they don’t sound confident they can close this program and have experience and reviews doing so, then keep looking! You may want to check out our reviews to help give you this confidence.
Request a rate lock on your loan once you are pre-approved and get your lender every item needed as fast as necessary to close your loan, so your rate lock doesn’t expire. Your side of the process is complete when the loan is closed, not when you think you sent enough to satisfy the lender and underwriter.
Take responsibility and move fast, as you know rates have been on the rise as of lately. Wait too long, and you could end up with a higher interest rate, therefore qualifying for a smaller loan amount than if you locked in faster on a lower price. It’s your job to ensure you meet all requirements, not the loan officer or lenders position to hold the file open as long as possible paying for the rate lock extension out of their pocket. Locks cost money because your lender is reserving the funds and rate you wanted. It’s your responsibility to ensure you move fast as not to let that lock expire or it could end up costing you.
BuildBuyRefi Will Provide OTC construction Loans On These 4 Property Types.
(1). Double-Wide Or Larger Manufactured Homes
A manufactured home that does not come in sections, it is delivered completely whole from the retailer, is larger than 400 sq. ft., and built already, or being custom built from an approved manufactured home dealer. The property must be a double-wide, triple-wide or quadruple-wide property. No singlewide properties are allowed under any exceptions. Eligible Up To 100% On VA & USDA, & Up to 96.5% FHA.
(2). Modular Homes
Modular homes are viewed by our team the same as stick built or site built homes. Many borrowers are choosing modular homes for many reasons, their superiority to build quality in climate-controlled conditions, and faster construction times when dealing with more in-climate weather around the country make these homes a great option. Not to mention the costs are significantly reduced over site-built homes. Eligible on All FHA up to 96.5% and up to 100% on all VA, & USDA Loan Programs.
(3). Stick Built / Site Built Frame, brick, or Stone Construction Homes
The most common construction type chosen for the one time close is the site built home, as long as it qualifies as a traditional single-family residence without being a non-traditional type explained above, you will be able to use the OTC loan to finance your custom build. Eligible up to 100% for Veterans on all VA programs, up to 100% on USDA available locations, & up to 96.5% FHA in all 50 states.
*Modular homes are not considered manufactured homes, they fall under the same category as Single Family Home and do not have the same restrictions as Manufactured Homes. Every program available to a Single-Family Home extends to Modular.
What Does FHA, USDA, & VA Loan Mean, And Which Do I choose?
These terms (FHA, USDA, VA) refer to the government-backed program type and more often which one you choose is decided by factors such as location, loan amount, borrower status, and borrower’s desired transaction request. Each program has a different set of product offerings underneath it that are uniquely different. Let’s explain what these are.
Review the 3 different loan program types available for the OTC construction from BuildBuyRefi.
FHA One Time Close Construction Loans.
The most popular and utilized program for the OTC construction loan is the FHA OTC. FHA stands for the Federal Housing Administration; a government agency devised to help increase homeownership to those with lower credit scores, income amounts, and higher debt ratios. Because of this the FHA loans come with Mortgage Insurance and does not automatically drop off when you get lower than 80%, you will be required to refinance out of an FHA loan if you want to drop the mortgage insurance monthly premium.
However, the FHA loan allows up to 96.5% on a one-time close construction purchase, meaning you can get in for as little as 3.5% down payment. The FHA OTC has a maximum loan amount depending upon what county the property is located.
USDA Rural Development One Time Close Construction Loans.
The U.S. Department of Agriculture backs these loans to increase home ownership in qualifying rural communities. To qualify, the home you build must be in a qualifying area. Mortgage insurance is required for USDA; however, the monthly MI amount is currently lower than that of a comparable FHA loan.
The USDA rural development program allows up to 100% for brand new manufactured, modular, and site built homes in all 50 states as long as you meet the required minimum credit score. It is a little tougher qualification standards then FHA as your debt to income ratio (DTI) must be lower than what the FHA requires. However they allow for large tracts of land, and there are USDA qualifying counties in all 50 states. The USDA has maximum income limits per number of people per household but does not come with a maximum loan amount limit.
VA One Time Close Construction Loans.
The best solutions available to Veterans and their spouses fall under the VA home loan benefits program. Of all manufactured loan programs, the VA loan offers the highest loan to value, the lowest interest rates and comes with no mortgage insurance at all. Most Veterans who are looking to build their dream home should be taking advantage of the VA construction loan program at every chance they can get.
Sometimes Realtors will turn away this loan type, that means you’re working with the wrong realtor because they are the strongest of all government-backed home loan programs. Every program offered through the VA allows for 100% or higher in loan financing. We provide the full 100% OTC construction loan, buy your land and home in one loan, not three separate transactions.
The VA construction loan comes with fewer reports required for manufactured homes if this is your chosen build choice as well, it moves much faster than both the FHA & USDA version of the OTC. You will even be able to finance large tracts of land and have certain exceptions granted that you will not find in conventional, FHA, or USDA types. The VA loan does not have any location restrictions or income restrictions, but it does have certain DTI and loan amount restrictions based upon what areas you are buying in.
Without Exception we want a minimum “middle of the 3” credit scores To Be Higher Than 620.
My middle credit score is above 620, what rate can I get?
The rate you receive depends on many factors since rates change daily, sometimes multiple times a day, the quote you receive today most likely will be different tomorrow. That is of course if you have not locked in your loan.
Borrowers with a 620 credit score may see a little higher rate than those with a 680, 720, and higher. The higher your credit score, investors will offer you better prices. They do this because those with higher scores have proven to be of lower credit risk than those with higher scores.
Many people who borrow with a lower credit score that has a higher rate, in the beginning, can raise their credit even if they took out a 100% loan six months to a year later. In cases when your score rises, we’re always working with our existing clients and reviewing market conditions to offer an internal streamline refinance to reduce rates.
Do you loan against bad credit for construction loans? What is the lowest score you accept?
Can we lend lower than 620?
For the One-Time Close Construction Loan, we do not allow any exceptions to the credit score. Most traditional construction loans require a 720 or higher credit score and 20% down, and since our programs start at 96.5% and go up to 100%, we have made a strict guideline requirement for the score not to go below 620.
Typically when a borrower has a score under 620, a few things are happening.
#1. The interest rate we can offer becomes too high.
The pricing adjustments that come for lower scores and loan amounts become a high risk for the lender. And due to us offering the best programs government-backed lending has to offer, we stay away from providing any loan that targets what the government deems to be “high costs.”
#2. The borrower has limited to no credit, or the credit trade-lines they have are not acceptable to our current underwriting guidelines.
It’s even true that some people can have a 620 credit score with limited trade lines that would not get approved, but it is essential to show our underwriters you can make payments on time and are at low risk for defaulting on your home loan. If you have a higher score but no active tradelines you want to call and speak to one of our bankers before applying for this loan.
#3. The borrower could be a few steps away from a much better credit score.
It's possible that if you fall under the 620 threshold, there are some areas that credit repair could help you become more attractive to our underwriters. In many instances, you don’t have to go through a 3rd party credit repair company as today’s lenders have tools to help you determine what moves you can make on your own to improve your score. Do what is needed and not only would you get a lower interest rate, you could qualify for a more substantial loan amount with better home options than if you settled for borrowing with worse credit.
The 5 Acceptable Income Types When Applying For A One-Time Close Construction Loan.
While we accept almost every income type when verifying and approving these types of loans, the two we won’t loan on are stated income loans or bank statement only loans.
W2 Full Time & Part Time Employees
Active Military Income
Retirement, Pension, 401k regular disbursement income
Social Security or Disability income
It’s important to note that any change during the process in employment status such as getting fired or switching jobs is grounds for denial or re-underwrite. You want to avoid any change in your job status while completing your loan, and if there is the slightest chance something might change you need to speak to your loan officer immediately about this.
Do not assume that because you are getting a better job offer that it will be approved. Changes like these scare underwriters and will increase the amount of documentation you’re required to provide. It could delay your closing, cost you a rate lock, or you could lose your purchase money escrow altogether.
You will save thousands in lost time and money by being as upfront as possible with your loan officer.
Aside From Working 7 Days A Week On Your Schedule, We Are Experts On The Most Popular Construction Program To Hit Today’s Mortgage Market!
The Truly Determined Borrower Ultimately Wants The Best Rate & Program Possible, And At BuildBuyRefi, We Know We Offer Some Of The Absolute Lowest Rates And Best Customer Service On The Market Today.
We Won’t Leave You Guessing What Is Going On!
You may ask, why do other lenders and even my local bank offer rates, shorter terms, or require a higher down-payments?
That’s a great question!
Short answer, because they aren’t the experts in these type of loans.
The Top 3 Reasons Why Other Lenders Find It Hard To Compete With BuildBuyRefi In The OTC Construction Lending Market.
#1. We Have The Most competitive Construction Loan products, rates & loan terms:
Most lenders, brokers, and banks only have a few programs, indeed not offering anything near the vast array of construction loan products we have. Their rates are higher and loan term shorter because they can’t touch the monthly volume we produce. They don’t offer the high loan-to-values because they still view this loan type as an increased perceived risk. If they can get you to put 20% down, they would rather have your equity.
#2. We’re seasoned veterans On All Construction & One-Time Close Loans:
Most are not seasoned veterans in the construction lending sphere, meaning the loan officer you worked with might never have closed one of these single-close construction loans before and that is a dangerous mix to get involved with. You need a banker that knows how to navigate these products, and most of our bankers have 15-30 years experience each lending on these more robust construction loan types.
#3. We Actively Close Construction Loans & Want Your Property Type:
Your local bank or credit union may be acting like they are doing you a favor to keep you with them, but they don’t want this type of loan on their books. They may talk you into putting more money down or taking a higher rate saying they are making an exception to the guidelines. In this case, their inability to be competitive is costing you more just by staying loyal. And while we love loyalty, we feel you shouldn’t take a rate that is 2-5% higher requiring 20% or more down to sacrifice for that loyalty.
Let’s Review The Cold Hard Facts For The One-Time Close Construction Loan, So There Are No Surprises!
The BBR one-time close construction loan replaces up to 3 loans for the average borrower, because of the versatility, it comes with higher fees and costs than a traditional construction loan. As a direct lender we have very few market investors (and OTC administrators) offering to buy and fund a real 100% OTC for VA & USDA, and up to 96.5% for FHA. Our other construction investors require 10-20% down for less attractive construction loans, higher interest rates for the land, and construction phase, and you must re-qualify during certain stages.
The BBR One-time close interest rates are higher, by as much as 1-1.25% of traditional pre-built purchase loans. On average our borrowers may see a loan discount or origination charge of 1-2% of the loan amount. Additionally, the OTC administrator working with our investor carries the most significant risk of the OTC program, because of this, their services come with a cost of 2.25% of the loan amount, and upwards of $1400 in final inspection, construction, and underwriting fees.
The administrator ensures that your home properly completed, even if your builder walks or goes out of business. Besides, the administrator will hold the builder to the highest standard required to complete your dream home, as well as inspecting and authorizing disbursement of funds as needed.
Lastly, the OTC loan requires NO MORTGAGE PAYMENTS or NO LAND PAYMENTS thru completion.
Loan interest is front-loaded into the initial calculations based on total project build-out, land (if applicable), and time frame to complete. This front-loaded interest is calculated using 8% for site-built homes and 9.95% for modular and manufactured homes. In conclusion, it's important to understand all fees and interest on this program are not out of pocket to the borrower.
*Fees can be charged directly to the builder or manufactured retailer which is allowed to be added into to contract price of the property, thus allowing you limited to zero down payment options.
We believe in 100% transparency from start to finish on all loans we offer. This program is by far our most popular loan program requested and because of this we've done extensive research to find the best options available today.
What we have found is other investors have less favorable terms, high down-payments, multiple layers of fees, multistage loan re-qualifying, and just more headaches for our borrowers.
We're honored to walk you thru this fantastic journey of building your dream home! We only ask you to understand the fees of this program as much as you embrace the positive features, so when and if you decide to move forward with us, you do so making the best decision for you and your family.
Now, if you're ready, please continue reviewing the highlights of this fantastic program, and let's get building.
5-Star Lender Reviews That WOW!
Richie, OK... so you've officially done something I've never seen in 22+ years selling real estate. Closed a VA Loan on 224 Acres, with a Manufactured Home. CONGRATULATIONS! and THANK YOU!!! Admittedly, I was skeptical (more like pessimistic) when James told me you were going to get this VA Loan completed. And I had many doubts along the way, because I'd seen so many VA Lenders fall flat on their faces, just before the Closing. BUT... You got the Job DONE! Occasionally, I find someone out there who has done an Outstanding Job, helping my Clients... and You are one of these! I'm now officially a FAN of You and Your Work. I would be honored to promote you and your services to other Agents within our company, and I intend to do so. I will call you when I've caught up on my work a bit... and learn more about how I can do my job better on the next VA transaction.
~Tom K. Realtor