Quick Answer
For most one-time close construction loans, lenders require a minimum credit score between 620 and 680, depending on the loan type. FHA one-time close loans may allow scores as low as 620, whereas conventional or VA options typically require a score of 660 or higher. Your exact requirement depends on the lender, loan program, and other qualifying factors.
What is a one-time close construction loan?
A one-time close construction loan is a mortgage that covers both the construction phase and the permanent mortgage in a single transaction. This eliminates the need for two closings, simplifying the process and saving borrowers on fees and paperwork.
Unlike traditional construction loans, which require separate applications and closings for the build and the long-term mortgage, a one-time close loan streamlines the financing process. This type of mortgage is ideal for homebuyers building a new property who want convenience, cost savings, and locked-in terms from the beginning.
What credit score do you need to qualify?
To qualify for a one-time close construction loan, your credit score plays a major role. The minimum requirement depends on the loan type:
| Loan Type | Minimum Credit Score | Notes |
| FHA One-Time Close | 620 | Allows low down payments; lenient credit standards |
| VA One-Time Close | 640–660 | For eligible veterans and service members |
| USDA One-Time Close | 640 | For rural borrowers, income limits apply |
| Conventional | 680+ | Stricter credit and income requirements |
Please note that these are the minimum scores.
A higher score may help you:
- Get a lower interest rate
- Qualify for higher loan amounts
- Reduce or eliminate mortgage insurance
- Meet tighter debt-to-income (DTI) thresholds
What other factors affect eligibility?
Your credit score isn’t the only thing lenders consider. One-time close construction loans require a full review of your financial profile, including:
- Debt-to-income ratio (DTI): Most lenders prefer a DTI below 45%
- Loan-to-value ratio (LTV): Maximum LTV varies by program (FHA allows up to 96.5%)
- Income verification: A Steady income history is essential
- Employment history: At least 2 years of consistent employment
- Down payment: FHA allows as little as 3.5%, but conventional loans may require 10–20%
- Reserves: Some lenders require several months of mortgage payments in savings
These underwriting criteria help assess whether you’re likely to repay the loan over the long term.
How does a credit score affect your loan terms?
Your credit score directly impacts several aspects of your construction loan:
- Interest rate: Higher scores often receive better rates
- Private mortgage insurance (PMI): Lower scores may result in higher PMI or MIP costs
- Approval speed: Strong credit can speed up the underwriting process
- Loan flexibility: Better credit may expand your loan program options
Even a small increase in your credit score could save you thousands over the life of the loan.
FHA, VA, and USDA one-time close loan options
One-time close loans are available through several government-backed programs:
- FHA One-Time Close: Designed for borrowers with lower credit scores and smaller down payments. minimum credit score is typically 620.
- VA One-Time Close: For eligible veterans and active-duty service members. No down payment is required, and the credit score threshold typically ranges from 640 to 660.
- USDA One-Time Close: Available for rural homebuyers with moderate income. The minimum credit score is generally 640, with zero down payment required.
These programs are more accessible to borrowers with limited savings or a history of past credit issues.
Can you qualify with a lower credit score?
Some lenders may consider applicants with scores below 620, but this is rare and usually requires:
- A large down payment (often 20% or more)
- Strong compensating factors, such as high income or substantial cash reserves
- A co-borrower with excellent credit
However, borrowers with scores below 620 may want to focus on credit improvement strategies before applying. This could include:
- Paying down credit card balances
- Disputing errors on your credit report
- Avoiding new credit inquiries during the application process
Steps to boost your credit before applying
To qualify for a one-time close construction loan, consider the following steps:
- Check your credit report for errors or outdated information
- Pay down revolving debt to lower your utilization ratio
- Avoid new credit applications for 6–12 months before applying
Gather financial documents in advance, including W-2s, pay stubs, and bank statements - Get prequalified with a lender to understand your current standing
These actions not only improve your credit profile but also help you navigate the construction loan process more smoothly.
When is the best time to submit an application?
It’s best to apply for a one-time close construction loan after finalizing your building plans but before breaking ground. You’ll need:
- Approved architectural plans
- A licensed builder
- Detailed cost estimates
- Lot ownership or purchase contract
Lenders require these documents to approve the draw schedule, which governs the release of funds during construction.
FAQ: Credit score for one-time close construction loan
Q: Can I get a one-time close construction loan with a 600 credit score?
A: Most lenders require a minimum score of 620, though a few may consider lower scores with strong compensating factors and a larger down payment.
Q: Does my credit score affect the construction phase or just the final mortgage?
A: Your credit score affects the entire loan, since the construction and permanent phases are combined into one approval process.
Q: Are credit requirements different for VA and FHA construction loans?
A: Yes. FHA allows lower credit scores (around 620), while the VA typically requires a score of 640–660, although exact numbers depend on the lender.
Q: How long does it take to close on a one-time close construction loan?
A: It typically takes 45 to 60 days, since the process includes both construction approval and mortgage underwriting.
Ready to start building your home?
Meeting the credit score requirement for a one-time close construction loan is the first step toward building your dream home. Whether you’re using an FHA, VA, USDA, or conventional program, understanding your credit and financial readiness gives you a clear advantage.