Jumbo Loans
Jumbo loans are loans for properties valued above the Conforming Loan Limit. For most counties in 2025, this equates to properties valued above $760,000.
Both the VA and Conventional loans support jumbo financing, though the lenders that back these loans usually have special additional qualification requirements to ensure that borrowers who want to finance such a large purchase can actually afford the transaction in the long run without undue financial stress. These extra qualification requirements usually translate to higher FICO requirements and lower DTI tolerances.
Interest rates for Jumbo loans are usually competitive or slightly higher than non-jumbo rates.
Renovation Loans
Renovation loans allow for a borrower to secure finances to purchase a home, while also securing additional funds to renovate, repair, or improve that very same home.
Renovation loans can be written under any QM program (VA, USDA, FHA and Conventional) and are an excellent way for a homebuyer to customize the house to their benefit. For example, a veteran with a wheelchair might secure a VA renovation loan to widen the doorframes of a house and equip the kitchen with appliances and cabinets that can be accessed by someone with mobility concerns. A USDA or FHA renovation loan may be used by a first time homebuyer to snag a "fixer upper" for under market value, put in some TLC, and build in some serious equity for when they eventually plan to upgrade to a bigger house.
Renovation loans are fantastic tools for savvy buyers to stretch their finances to purchase properties that usually would be outside of their budget. It is important to remember, though, that renovation loans do come with some additional fees and inspection points, compared to non-renovation loans. Also, rates for these loans tend to be a little higher, as lenders have to account for the fact that the properties financed by these loans are usually not in the best condition.
Construction Loans
Construction loans are financing vehicles intended to help borrowers create a property through blood, sweat, and careful financial management. In addition to financing the actual construction component of a build, construction loans usually allow funds for the acquisition of the land that the home will be built upon, if required.
Usually reserved for proven builders and general contractors, it is technically possible for anyone who is financially qualified enough to secure financing to build a property from scratch.
When it comes to qualifications, most construction lenders want to see a FICO score in the mid-600's, and these loans oftentimes come with a notable down payment requirement (10-20% is the industry average).
These loans are almost always structured as interest-only, whereby each month, the borrower is responsible for paying interest on the total amount of money they have borrowed thus far. At the completion of the build, construction loans will require the full payoff of the funds borrowed. This means that the borrower will need to either liquidate the property they just built (hopefully at a profit) or refinance it into a more permanent loan.
Interest rates for these types of loans usually range from the upper single digits, all the way into the teens (8.5%-15%), depending on the qualifications of the borrower and the type of project being financed.
One Time Close Construction Loans
Construction loans are alright, but the large down payment requirement and necessity to refinance the project upon completion oftentimes alienates borrowers who simply do not have that kind of money available to spend to build their own home.
Thankfully, OTC loans are out there to fill that need. A One Time Close construction loan is construction loan that automatically converts to a fixed rate government-backed loan upon the completion of the home. Even better, because these are government-backed loans, they must adhere to the federal requirements that govern these loan programs. This means that a veteran who wants to use a VA OTC loan can technically build the home of their dreams without a down payment.
Because these loans start as construction loans, they do have interest-only initial components (of which VA OTCs finance into the borrowed amount). However, when the home is completed, they automatically convert into 30 year fixed rate loans under their initial program with an interest rate that is close to the current market average for that program (if that rate is lower than the rate locked prior to closing).
The last major benefit of OTC loans is that there is one closing, which drastically saves the borrower money in the long run. OTC loans can be used to do anything from build forever homes to drop a manufactured home on a parcel of land to use as a country escape or first home.
When it comes to downsides, OTC loans are complicated and not for the feint of heart, usually running between three to six months from preapproval to closing. That said, it is our opinion that these loans are the penultimate when it comes to building your future the way that you want it to be built.
One Time Close Construction Loans
Construction loans are alright, but the large down payment requirement and necessity to refinance the project upon completion oftentimes alienates borrowers who simply do not have that kind of money available to spend to build their own home.
Thankfully, OTC loans are out there to fill that need. A One Time Close construction loan is construction loan that automatically converts to a fixed rate government-backed loan upon the completion of the home. Even better, because these are government-backed loans, they must adhere to the federal requirements that govern these loan programs. This means that a veteran who wants to use a VA OTC loan can technically build the home of their dreams without a down payment.
Because these loans start as construction loans, they do have interest-only initial components (of which VA OTCs finance into the borrowed amount). However, when the home is completed, they automatically convert into 30 year fixed rate loans under their initial program with an interest rate that is close to the current market average for that program (if that rate is lower than the rate locked prior to closing).
The last major benefit of OTC loans is that there is one closing, which drastically saves the borrower money in the long run. OTC loans can be used to do anything from build forever homes to drop a manufactured home on a parcel of land to use as a country escape or first home.
When it comes to downsides, OTC loans are complicated and not for the feint of heart, usually running between three to six months from preapproval to closing. That said, it is our opinion that these loans are the penultimate when it comes to building your future the way that you want it to be built.