What Is a One-Time Close VA Construction Loan?

A one-time close VA construction loan is a special mortgage program that combines the land purchase, construction costs, and long-term financing into one single loan. With only one closing date, you avoid the hassle and cost of multiple loans and multiple closings.

You also benefit from no down payment (assuming you have full VA loan entitlement), no private mortgage insurance (PMI), and often a better interest rate than you might get on a standard construction loan. Once construction is complete, the loan simply converts to a standard VA mortgage—no second closing required.

Why Choose a One-Time Close VA Loan?

Traditional construction loans often involve two separate closings: one for the temporary construction financing and another for the long-term mortgage. This means double the closing costs, more paperwork, and added stress. With a one-time close VA construction loan, you consolidate everything into a single transaction. According to some estimates, this could save you $5,000 to $10,000 on a $300,000 project by eliminating the need to close twice.

Even better, VA loans require 0% down. For a conventional construction loan on a $300,000 home, you might need to put down $60,000 (20%). The VA’s approach ensures you can keep your savings for other necessities—like building materials, furniture, or an emergency fund.

Plus, you’ll skip monthly PMI (which usually costs $100–$200 per month on a conventional loan). If you want to build in an area like San Marcos, Texas—where real estate values have been rising—the one-time close VA loan program can make homeownership much more attainable.

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Why Choose It?

Save on closing costs, avoid a large down payment, and finance your home’s construction and mortgage under one seamless loan—ideal for veterans who want to build equity from day one and skip the usual construction-loan hassles.

How a One-Time Close VA Construction Loan Works

Let’s say you’ve found a $50,000 lot and plan to build a $250,000 home. A one-time close VA construction loan will cover the full $300,000. You close once at the start, and the lender typically provides interest-only payments during the construction phase—often in the 6–7% range.

After the home is completed (usually within 6–12 months), the loan transitions into a regular VA mortgage. At that point, you begin making your standard monthly payments (principal + interest) at the agreed-upon rate. In many counties, VA loan limits in some areas have reached $1 million or more, so most veterans can handle both land and construction under this single loan.

One-Time vs. Two-Time Close Comparison

Feature	One-Time Close VA	Two-Time Close	Why It Matters
Closings	1	2	Saves $5K-$10K in fees
Down Payment	0%	10-20%	No large upfront cost
Interest Rate	~6–7% (build phase)	~7–8% (two loans)	Slightly lower long-term cost
Loan Limit	$1M+ (2025)	Varies	Covers land + build in one loan
PMI	None	Often required	Saves $100-$200 monthly

Key Takeaway: By avoiding a separate construction loan, you only pay for one closing and lock in your interest rate before any building begins—protecting you if rates rise during construction.

Steps to Get a One-Time Close VA Construction Loan

Building a home is exciting, but it comes with extra steps compared to buying a move-in-ready house. The following five-step process will help you navigate a one-time close VA construction loan successfully.

Step 1: Find a VA-Approved Lender

Not every lender offers one-time close VA construction loans—some only handle standard VA purchase loans. Submit your information on our simple form and we will get you in touch with VA lenders in our network who offer VA construction loans.

Step 2: Pick Your Land and Plan

Once you know your lender supports one-time close VA loans, start searching for a residential-zoned lot. For example, you might find a $60,000 plot in a growing area. Next, draft your home design—like a 2,000-square-foot layout costing around $260,000 to build.

You’ll need these blueprints before applying so the lender can see the scope of your project. Make sure your chosen contractor is VA-approved and familiar with VA Minimum Property Requirements (MPRs).

Step 3: Get Pre-Approved

The lender will ask for proof of veteran status (your DD-214), income verification, credit score (often 620+), and any blueprint details you have. They’ll evaluate your debt-to-income (DTI) ratio—typically around 41% or less. If approved, you’ll get a pre-approval letter that indicates you qualify for, say, a $320,000 total loan. This can help you secure the land more easily, since sellers know you’re serious and financed.

Step 4: Secure Permits and Builder

Before closing, you’ll need to finalize your construction permits from your county or city—a process that can range from $1,000 to $5,000 depending on local requirements.

You’ll also need to lock in a VA-approved builder who can provide a firm bid for the construction costs. This might take a few weeks or longer, so be patient. Once everything is in place—blueprints, permits, builder contract—you’re ready to close.

Step 5: Close and Build

At your single closing, the $60,000 for the land and the $260,000 build cost will be rolled into a $320,000 mortgage. Construction generally lasts 6–12 months. During that time, you make interest-only payments on the portion of the loan used for building.

These monthly payments can often be around $1,500, but exact amounts vary. Once the home is finished, your loan automatically converts to a regular VA mortgage, and you begin standard principal-plus-interest payments.

One-Time Close VA Loan Costs

Item	Cost Range	Notes
Land	$50K-$100K+	Must be zoned residential
Construction	$200K-$300K+	For ~2,000 sq. ft., average finishes
Permits	$1K-$5K	Varies by county
Interest (Build)	$5K-$10K	6-7% over 6-12 months
Closing Costs	$5K-$10K	One-time closing
Total Loan	$250K-$400K+	0% down if you qualify

Benefits of a One-Time Close VA Loan

• 0% Down: Unlike conventional construction loans that may require 10–20% upfront, VA loans let eligible veterans finance the entire cost.
• No PMI: PMI can easily add $100–$200 monthly to your mortgage payment. VA loans eliminate this expense.
• One Closing vs. Two: You’ll only pay closing costs once—saving you thousands of dollars.
• Locked Rate: You lock in your mortgage rate at the start, protecting you from interest rate hikes during the building period.
• Simplified Process: With a single underwriting and closing, the entire homebuilding journey can be more streamlined and less stressful.

Example: A veteran building a $300,000 home saved nearly $7,000 in additional fees and avoided having to make a down payment of $60,000 that a conventional lender would have required.

Challenges You Might Face

While a one-time close VA construction loan can be highly beneficial, it isn’t without hurdles:

• Limited Lenders: Only about 1 in 5 VA lenders offer construction loans, so you may need to contact multiple banks or credit unions.
• More Paperwork: You’ll gather additional documentation—blueprints, building contracts, land surveys, permits—before closing.
• Longer Timelines: Expect 6–12 months (or more) for construction, plus potential delays in securing builder approvals. If your builder drops out, you may face extra delays while you find a replacement.
• VA-Approved Builder Required: This can limit your choices, though it also helps ensure quality and compliance with VA standards.
• Higher Interest During Construction: The 6–7% interest rate for the construction phase might be slightly higher than for a standard VA purchase loan (often around 5.5%).

Real Example: One veteran selected a lot for $60,000 and a build cost of $250,000. The builder unexpectedly withdrew, forcing the veteran to find a new VA-approved contractor. This resulted in a 90-day delay, but the project eventually closed at $310,000 total.

Who Qualifies for a One-Time Close VA Loan?

You must meet VA eligibility guidelines, which typically require a certain length of service, an honorable or acceptable discharge status, and a valid Certificate of Eligibility (COE). Additionally, most lenders look for:

• Credit Score: Often 620+ for VA construction loans (although some lenders may be flexible).
• Debt-to-Income Ratio (DTI): Ideally 41% or lower, meaning your total monthly debts shouldn’t exceed 41% of your gross monthly income.
• Stable Income: Steady employment or consistent VA disability/pension income can help you qualify.
• Plans to Occupy: You must plan to live in the home as your primary residence upon completion. Land-only purchases aren’t allowed without immediate construction plans.
• VA Funding Fee: Generally 2.15% for first-time users, but disabled veterans may be exempt, saving thousands of dollars.

Short Answer: Who Qualifies?

Veterans who meet VA service requirements, have acceptable credit (often 620+), keep their DTI around 41% or below, and plan to occupy the newly built home as a primary residence.

Real Stories of One-Time Close VA Success

No matter the home style—spacious family house, modest starter home, or a custom “dream build”—veterans across the country have used one-time close VA construction loans to make it happen:

• Smooth Build: One veteran combined an $80,000 lot with a $220,000 home for a total of $300,000. He closed once, built in 10 months, and moved in just before the school year.
• 12-Month Delay Turned Success: Another veteran purchased a $60,000 lot but had to change lenders mid-process to find one that offered a one-time close VA loan. Despite a delay, they closed on a $310,000 total project and moved in within a year.
• Starter Home Win: A couple purchased a $50,000 rural lot and spent $200,000 on a smaller home. They finished in under 8 months and locked in a 6.25% interest rate—well below what they would have paid a year later.
• Luxury Build: With a $100,000 lot and a $400,000 custom design, a retired Marine built a $500,000 home with zero down. Though it took nearly 11 months, the result was a high-end property perfect for retirement living.

Why It’s Worth the Effort

According to official VA data, nearly 43% of veterans used VA-backed loans for home purchases in some regions, highlighting the program’s popularity. A one-time close VA construction loan extends these benefits to those who want a custom build.

For a $320,000 project, a conventional lender might demand $64,000 (20%) just for the down payment, whereas VA requires 0%. Plus, you’ll save on PMI, which could total up to $2,400 per year on a conventional mortgage.

Yes, you’ll likely face more paperwork and a longer build process, but the reward is a home tailored to your preferences—often at a monthly cost that’s competitive with or even lower than many existing homes on the market. With current land values rising in many parts of the country (some areas of Texas saw 6% annual increases, according to Redfin), building now can also lock in your land price before it appreciates further.

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Is It Worth It?

For many veterans, absolutely. You can finance your dream home without a large down payment or multiple closings, and you’ll likely save thousands on closing costs and PMI.

FAQs About One-Time Close VA Construction Loans

1. What’s a one-time close VA construction loan?

   It’s a single loan that covers both the purchase of land and the cost to build. You close once, pay interest-only during construction, then transition to a regular VA mortgage after.

2. Can I buy land with a one-time close VA loan?

   Yes, as long as you’re also building a home on it right away. The VA doesn’t allow raw land purchases without immediate construction plans.

3. How much can I borrow with a one-time close VA loan?

   In 2025, VA loan limits can exceed $1 million in high-cost counties. That’s typically enough to cover most land + build projects, though you should verify local limits and your personal eligibility.

4. What’s the interest rate on a one-time close VA loan?

   Rates during construction generally range from 6–7%, depending on your lender and credit profile. After construction, your rate may adjust slightly or remain locked, based on your closing agreement.

5. Do I need a down payment for a one-time close VA loan?

   Generally no, if you have full VA loan entitlement. This 0% down benefit is a major advantage of the VA program.

6. How long does a one-time close VA loan take?

   Construction often lasts 6–12 months. Preparing your blueprints, securing permits, and getting final lender approval can add another 30–60 days before construction starts.

7. Can I use any builder with a one-time close VA loan?

   You must choose a VA-approved builder who meets VA Minimum Property Requirements and is familiar with VA inspections. This ensures quality and compliance, but it can limit your options.

8. Are one-time close VA loans hard to get?

   They can be more involved because you need detailed construction plans and a VA-approved builder. Fewer lenders offer them, so shopping around is key. However, the savings on closing costs and the ability to borrow with 0% down make it worthwhile for many veterans.

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The Bottom Line

A one-time close VA construction loan is an exceptional resource for veterans who want a custom-built home with minimal out-of-pocket costs.

While it requires patience and coordination with specialized lenders and VA-approved builders, the long-term benefits—no down payment, no PMI, and a single closing—can save you thousands of dollars and countless headaches.

If you’re ready to break ground on your dream home, consider this powerful VA benefit and enjoy the pride of creating a residence uniquely suited to your needs and lifestyle.