VA One-Time Close
Construction Loan
Build your dream home with one loan, one closing, and a guided construction process.
*For VA OTC loans, interest-only payments during construction are built into the construction budget and handled during the construction period, subject to program requirements.
VA OTC Construction Loan Overview
A VA One-Time Close Construction Loan allows eligible veterans to finance the construction of a new home and the permanent VA mortgage with one closing. Instead of closing twice, the borrower closes once before construction begins. During construction, funds are released to the builder through approved draws.
One Loan
Construction financing and permanent financing are combined into a single loan structure.
One Closing
The borrower closes before construction begins — no second closing after the home is built.
Guided Build Process
The project moves through approval, closing, draws, final inspection, and permanent financing.
Why Use a VA OTC Construction Loan?
One Closing
Borrower closes one time before construction starts.
Streamlined Process
Construction and permanent financing are handled under one loan structure.
VA Benefits
Eligible veterans may qualify for 100% financing — no down payment required.
Builder Draws
Builder receives funds through the approved draw process as work is completed.
Transparency
Track project milestones, required documents, and updates through the client portal.
Guided Journey
The portal helps reduce confusion and keeps everyone aligned throughout the build.
The Road From Pre-Approval to Your New Home
Required Documents
Builder & Project Approval Guide
Builder Approval
Before the loan can move to final approval and closing, the builder must be reviewed and approved. This step confirms the builder is properly documented and eligible to complete the project.
💡 Tip: The earlier the builder approval package is completed, the smoother the process usually feels for everyone involved.
Project Approval
The project approval review confirms that the construction plans, contract, budget, appraisal, permits, and supporting documents meet program requirements.
⚠️ Note: If the contract or budget changes before closing, the project may need to be reapproved.
Construction Draws
Construction funds are released through draws as the builder completes work. The builder requests a draw, the completed work is reviewed or inspected, and funds are released based on the approved draw process.
Draw Process Steps
Draw Status Examples
Draw Fee Schedule
$195 per draw construction fee
| Loan Amount | Number of Draws | Fee Per Draw | Total Draw Costs |
|---|---|---|---|
| Up to $250,000 | 5 | $195 | $975 |
| $250,001 – $500,000 | 8 | $195 | $1,560 |
| $500,001 – $750,000 | 10 | $195 | $1,950 |
| $750,001 – $1,000,000 | 12 | $195 | $2,340 |
| $1,000,001+ | — | $195 | Upon Review |
⚠️ The final draw is typically held until end-of-construction requirements are complete, such as final inspection, Certificate of Occupancy, and loan modification documentation.
VA OTC Program Parameters
Subject to program, lender, VA, underwriting, appraisal, and eligibility requirements.
Budget, Fees & Contingency
What to Include in Your Budget
5% Contingency Required
A 5% contingency is required in the construction budget to help cover unexpected costs. Any unused contingency may reduce the borrower's principal balance at modification.
Key Budget Notes
- ✓ Unused contingency may reduce principal balance
- ✓ Interest reserve may be included in budget
- ✓ Borrower cannot receive cash back
- ✗ Escrow holdbacks not allowed
- ✗ Owner-builders not permitted
Frequently Asked Questions
Track Your VA OTC Project
Your personal client portal gives you real-time visibility into your project — from pre-approval to move-in day.
Open Client Portal