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FHA construction loans may be used to finance construction of a one- to four-unit residence through a Construction to Permanent Mortgage through the FHA One-Time Loan Program. It's one of the best products on the market that very few people fully understand.

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FHA.com is a privately owned website, is not a government agency, and does not make loans.

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FHA.com is a privately owned website, is not a government agency, and does not make loans.

FHA One-Time Close Construction Loans

10 Reasons a Home Builder Can Benefit

Since its inception in September 2001, FHA.com has become a valuable tool for news and information pertaining to FHA mortgage products. Our site offers knowledgeable FHA lenders who specialize in FHA lending the ability to connect with potential customers in need of FHA mortgage loans. These fully licensed lenders offer complimentary pre-approvals to their customers in the comfort they need to shop for their home with confidence.

In our constant desire to find trends within the FHA home purchase market, we have done some extensive market research on the FHA One-Time Close Construction to Permanent Loan product and wanted to share our findings.

FOR HOMEBUYERS

Here are the top 10 reasons a buyer would choose to build a new home rather than buy a resale home:

  1. The buyer can design and build a brand-new home versus a resale with the same FHA credit requirements and low 3.5% required down payment.
  2. Gifts are allowed for 100% of the needed 3.5% required down payment.
  3. Up to 6% seller/builder contribution for borrowers’ closing costs & prepaids.
  4. Credit scores can be as low as 620.
  5. FHA offers more flexible underwriting requirements with relaxed debt ratios.
  6. No reserve requirement.
  7. The buyer makes no payments until construction is complete.
  8. The permanent FHA loan closing is done one-time before construction begins.
  9. No re-qualifying or document updates needed whatsoever.
  10. Interest rate is protected during construction.

FOR BUILDERS

We spoke with many mortgage companies who have years of experience and have closed these FHA One-Time Construction Loans. We found that the FHA One-Time Close Loan is one of the best products on the market that very few people know about. While there are many educated and knowledgeable loan officers and /or companies that offer this product, there are only a select few that truly understand the entire process. We have written several articles about the FHA One-Time Close product and gave our visitors the ability to be put in touch with a licensed FHA One-Time Close lender in their area.

The response has been excellent during our 6-month test pilot. We successfully matched 200+ qualified OTC leads who desired to be matched with one knowledgeable lender in their jurisdiction. The feedback on the quality of the potential borrowers was excellent, yet in most cases, the borrower still had not found a lot and/or an approved FHA builder.

For example, a qualified couple desired to build a new home in Las Cruces, New Mexico in Dona Ana County utilizing the FHA One-Time Close program. Introductions were made to the licensed lender in New Mexico and the couple were pre-approved. Then the process started for the lender to find a qualified builder willing to work with their client. We are simply trying to expedite the match.

Qualified builders who want to build stick/site build homes utilizing the One-Time Close Program offered by the FHA now have a new avenue for attracting additional clients simply by completing a no-cost form and once approved, giving this financing option to the buyer. So, if you are a builder in Las Cruces, New Mexico, you can sign up to be an approved One Time Close approved builder with one of the largest FHA One-Time Construction Administrative companies in the country.

Once the builder is approved and meets the guidelines set forth by the lenders, the benefits start immediately. The next time our company gets a request for an FHA One-Time Close home loan in Las Cruces, New Mexico, or better yet (the next time a retail loan officer specializing in this product gets a request for an FHA One-Time Close loan in Las Cruces who wants to build, communication to the consumer will include your firm as an approved builder in that jurisdiction. In addition, you will be able to direct future customers who want to take advantage of the FHA One-Time Close to a licensed mortgage banker in your area that has expertise in the One-Time close construction process and can fulfil this loan request. Signing up would be a win/win proposition.

For builders interested in receiving the FHA One-Time Close builder approval form, please send your request to [email protected]. Please include your complete company name, your first and last name, e-mail address, and contact telephone number.

Please note that the FHA One-Time Close Construction Program (investor requirement) only allows for single family dwellings (1 unit) – and NOT for multi-family units (no duplexes, triplexes or fourplexes).

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FHA Loan Articles and Mortgage News

FHA Loan Facts You Should Know

October 12, 2021 - Do you have misconceptions about how FHA home loans work? Some people mistakenly count themselves out of the running for an FHA mortgage for reasons that simply are not true. Don’t count an FHA mortgage out of the running if you are comparing loan products to see which one is best for you.

Construction Loan Rules for First-Time Buyers

July 3, 2021 - Are you a first-time home buyer? If so, you have a wide range of options open to you. Some are surprised to learn that those options include the ability to build a home on your own lot using a One-Time Close construction loan. Yes, even a first-time borrower may qualify for these loans.

First-Time Home Buyer Mortgage Options

June 14, 2021 - Did you know that as a first-time home buyer you have the option to purchase a condo unit with an FHA mortgage? There are also options for first-time borrowers to apply for FHA rehab loans for renovations and even an FHA home loan that allows you to build instead of buying.

One-Time Close Construction Loans in Georgia

May 25, 2021 - FHA / VA / USDA One-Time Close construction loans are an important option to consider for those looking to build  a new home in Georgia. Georgia home values have gone up 10.6% over the past year and Zillow predicts they will continue to rise within the next year.

Five Important FHA and VA Construction Loan Approval Questions

May 22, 2021 - What does it take to get approved for a One-Time Close construction loan? Many borrowers are tempted to build a dream home instead of buying an existing house. If you want to build a house on your own land the One-Time Close mortgage is for you.

One-Time Close Construction Loans in California

May 10, 2021 - FHA / VA / USDA One-Time Close construction loans are an important option to consider for those looking to build  a new home in California. California home values have gone up 11.2% over the past year and Zillow predicts they will continue to rise within the next year.

One-Time Close Construction Loans in Florida

May 3, 2021 - FHA / VA / USDA One-Time Close construction loans are an important option to consider for those looking to build  a new home in Florida. Florida home values have gone up 10.0% over the past year and Zillow predicts they will continue to rise within the next year.

How Much Down Payment Do I Need to Build My Home?

April 27, 2021 - If you’re thinking about building your home from the ground up using a One-Time Close loan, your down payment depends on the type of mortgage you seek -- VA, FHA, USDA, conventional, etc. Down payments requirements can range from zero to 20% and is separate from closing costs.

Amortization and the FHA One-Time Close Construction Loan

April 26, 2021 - The FHA One-Time Close construction loan, like its USDA and VA counterparts, is a mortgage that allows you to have a house built to your specifications rather than buying an existing home. But one issue borrowers need to be aware of when using a construction loan--amortization issues.

One-Time Close Construction Loans in Texas

April 15, 2021 - FHA / VA / USDA One-Time Close construction loans are an important option to consider for those looking to build  a new home in Texas. Texas home values have gone up 9.3% over the past year and Zillow predicts they will continue to rise within the next year.

SEE YOUR CREDIT SCORES   From All 3 Bureaus  

Do you know what's on your credit report?

Learn what your score means.


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