The VA One-Time Close Loan: How Veterans Can Build a Home with No Money Down

Homeownership is part of every veteran’s long-term financial security, yet many struggle to secure construction financing. The reality? Most traditional lenders won’t approve VA construction loans, and those that do often require multiple closings, higher fees, and stricter qualifications, making the process complicated, expensive, and frustrating.

If you're a veteran or active-duty service member looking to build instead of buy, the VA One-Time Close Construction Loan (OTC Loan) is your best financing option. This loan lets you combine land purchase, home construction, and permanent mortgage into a single transaction, eliminating the hassle of multiple approvals and unexpected costs.

Most veterans searching for a VA construction loan are left with unclear lender requirements, confusing guidelines, and no direct path forward. We’ve put together this step-by-step guide so you can:

✅ Understand VA new construction loan requirements—get approved faster

✅ Avoid common mistakes that cause loan denials—save time and money

✅ Use 100% VA financing with zero down payment—keep cash in your pocket

Find the Perfect Mortgage for Your Dream Home with Be My Neighbor.

Compare options, calculate payments, and get expert guidance—all in one place.

Get Pre-approved

A VA One-Time Close Construction Loan (VA OTC Loan) is a single-close mortgage that finances your land, construction, and permanent home loan in one transaction. This means no multiple approvals, no additional closing costs, and no re-qualifications.

With a VA One-Time Close Loan, you:

• Skip the hassle of finding multiple loans—everything is included in one loan.

• Avoid re-qualifying after construction—your approval is locked in from day one.

• Get 100% financing—no down payment is required for eligible veterans.

• Save thousands on closing costs—only one closing, not two or three.

To be eligible for a VA OTC Loan, you must meet certain requirements:

• You must be a veteran, active-duty service member, or eligible surviving spouse.

• The home must be your primary residence.

• Your builder must be VA-registered and meet VA construction standards.

• Only specific home types qualify: Stick-built, modular, multi-wide manufactured homes, and some unique styles like barndominiums.

• Land must pass required inspections (septic, survey, zoning compliance).

Going through the VA One-Time Close Loan process requires careful planning. Below is a step-by-step roadmap to securing financing for your home.

Start by completing a loan application with a lender that offers VA construction loans. Next, schedule a consultation to review your eligibility, discuss requirements, and clarify the loan process. Once pre-approved, you’ll receive a fee worksheet that outlines estimated costs, helping you establish a clear budget for your land purchase and home construction.

Pro Tip: Mortgage pre-approval is important for locking in rates and determining how much home you can afford.

Your builder must be VA-registered and meet specific requirements. They need to provide their business name, contact details, and VA Builder ID (if already registered). Additionally, they must submit an estimated project timeline and a detailed cost breakdown of the construction to ensure compliance with VA construction loan guidelines.

Before breaking ground, the land must pass key assessments:

• PERC Test – Confirms septic system feasibility

• Survey and permits – Verifies property boundaries and zoning compliance

• Plat Map – Identifies public utilities and flood risk

If you own land, you must provide a deed, survey, and valuation details.

Once your builder and land are approved, the lender will:

• Underwrite your loan to verify income, credit, and assets

• Order an appraisal based on build plans and land

• Finalize loan details before construction starts

Tip: Avoid big financial changes like buying a car, co-signing loans, or making large deposits, as these could impact your loan approval.

Once you close on your loan, construction begins.

• The builder will request loan draws as work progresses.

• Construction typically takes 6-12 months.

• Once the home is complete, the loan converts into a permanent mortgage.

Note: Any unused construction funds will be applied to reduce your loan principal.

• Quitting your job – Income stability is required throughout the process.

• Making large, unexplained bank deposits – Lenders analyze financial activity.

• Taking on new debt – Avoid major purchases like cars or furniture before closing.

• Choosing a non-VA-approved builder – Only VA-registered builders can work on the project.

For eligible veterans who want to build a home with minimal upfront costs, the VA One-Time Close Loan is one of the most accessible options available. By consolidating land, construction, and permanent financing into a single transaction, this loan reduces costs and streamlines the process.

However, understanding the loan structure, requirements, and timeline is key before committing.

Find the Perfect Mortgage for Your Dream Home with Be My Neighbor.

Compare options, calculate payments, and get expert guidance—all in one place.

Get Pre-approved

No, VA loans typically offer 100% financing, meaning no down payment is required.

No, VA OTC Loans are designed for immediate construction—you must have a builder and construction plans in place before loan approval.

They will need to register with the VA and submit the necessary documentation before your loan can proceed.