The Honest Self-Assessment
Do you actually qualify? Answer these four questions before you call anyone.
Most people who want a VA One-Time Close construction loan do not end up getting one. Not because the program is bad, but because there is a huge difference between what is permissible and what is feasible. These four questions are the exact filter I run on the phone every day. Run it on yourself first, honestly, and you will save both of us an hour.
Answer all four honestly. The fork at the bottom tells you what to do next either way.
Why a qualification page instead of a sales page
Roughly 99% of the people who want this loan either will not qualify, will not be willing to do what it takes, or have pie-in-the-sky ideas of what they can do. That is not an insult, it is the honest math of a hard product. The VA rules are generous on paper. The investors who actually fund these loans, the builders who actually build them, and the appraisers who have to support the value are not.
So instead of warming you up and letting you find the walls one at a time over three months, here are all four walls at once. If you clear every one of them, you are a real candidate and I want to talk to you. If you hit even one, the honest answer is a different path, and that path is laid out here, no shame attached.
The four questions
Every one of these is a yes-or-no. Be honest, nobody is watching.
Is your middle credit score 660 or higher?
The VA has no minimum credit score. On paper, anyone with entitlement can apply.
Currently, all investors for this loan product require a 660 credit score. Not most. All.
This is the wall people argue with the most, so let me be plain: the 660 floor is not a VA rule and it is not my rule. It comes from the investors who put up the money, and just because the VA allows it does not mean you can find an investor to fund it. If you are under 660 today, the move is to work on the score and come back, not to call ten lenders hoping one says something different. They will not.
Do you have a licensed, experienced builder who is not a relative?
The VA will even let you build the home yourself.
No investor will fund a self-build. You cannot even stick a shovel in the dirt yourself. And your builder gets underwritten just like you do.
Your builder's credit, financial stability, and as-built portfolio all get reviewed, because the lender is about to hand them your construction budget in stages. They have to be stable and experienced. Do not assume the guy that does sunrooms as a side job will be approved to build your home, and do not plan on using your brother-in-law. Here is exactly what the builder has to survive.
Have homes like yours actually sold nearby, at the number yours has to hit?
The VA allows any type of structure that is compliant with local building code, built almost anywhere.
The appraiser must find 3 comparable properties that sold within the last 12 months, within a reasonable distance of your build. That applies to any loan type, not just VA.
And the number they have to support is bigger than you think. On a $100,000 lot with a $500,000 build, a $25,000 contingency, and roughly $50,000 of interest that accrues during construction, the finished home needs to appraise for at least $675,000. Are there comps similar to your home that have sold for $675,000 in the last 12 months in your area? If you cannot answer that with confidence, read how the appraisal works before you fall in love with a floor plan. This is the single biggest killer of these deals. I am not kidding, every single day I disappoint a fellow vet with that requirement.
Can you accept a rate about 1% higher than a normal VA rate?
Zero down, one closing, rate locked before you break ground. All true.
The rate on this loan runs about 1% higher than a typical VA rate. Just accept that, it is what it is.
You are paying for a lender to carry construction risk and hold funds in escrow for a year. The normal play is a VA IRRRL streamline refinance after the loan converts to permanent financing, which brings the rate back down. That is not a failure, it is the expected next step, and it is covered here along with everything else that happens at and after closing. If a temporary rate premium is a dealbreaker for you, this product is not your product.
By refinancing the consumer's existing loan, the consumer's total finance charges may be higher over the life of the loan.
Four questions, four answers. Pick your lane.
Both lanes end with you in a home. Only one of them ends with you building it.
Four yeses? You are the 1%. Let's go.
- Middle score at 660 or higher
- Licensed, experienced, unrelated builder ready to be underwritten
- Real comps near your build at the number your project has to appraise for
- Eyes open on the rate premium, IRRRL planned for after
You are exactly who this loan exists for. Read the deep pages if you want the full mechanics, or just get moving.
Start My OTC Application Book a Call to Talk It Through Call (843) 569-7283 / 843.LOW.RATEAny single no? Stop here, and that is fine.
One no is enough. This product does not bend, and pushing on it wastes your money and your time. But a no on VA OTC is not a no on homeownership. A normal VA loan on an existing home is still zero down, with no 660 investor wall and no comps gamble, and it will be there whenever you are ready.
Read what to do instead, then get on our list so we can catch you a good rate when the time comes.
Get VA Rate Alerts for a Future Purchase or Refi See My AlternativesDig into the mechanics
You know where you stand now.
Four yeses means we should talk this week. Any no means a different loan later, and we will be here for that one too.
Not building right now? Get VA rate alerts for when you buy or refinance the normal way.
(843) 569-7283 / 843.LOW.RATECall or text a VA construction specialist