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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

VA One-Time Close Construction Loans

June 24, 2020 - Did you know that the VA offers a One-Time Close construction loan similar to the FHA One-Time Close loan? The VA version of the One-Time Close loan allows qualified borrowers to finance both the construction and the permanent mortgage at the same time.

Build a House on Your Own Land With an FHA Loan

June 5, 2020 - You can build on your own lot using an FHA mortgage, even as a first-time home buyer. You will get the same 3.5% down payment minimum on an FHA construction loan as you would buying existing construction real estate.

FHA Construction Loan Facts

May 27, 2020 - Do you want to have a house built for you from the ground up? This is an option, even for first-time home buyers. An FHA One-Time Close construction loan has a 3.5% down payment requirement, which is lower than you may be offered on a conventional loan.

One-Time Close Construction Loans in Texas

May 20, 2020 - 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 5.6% over the past year and Zillow predicts they will rise 4.0% within the next year.

FHA One-Time Close Construction Loan Rules and Lender Requirements

May 3, 2020 - When you examine your FHA construction loan options, choosing between a One-Time Close construction loan and other construction loan options with two loans and two closing dates are only part of your decision-making process.

One-Time Close Construction Loan Advice

February 29, 2020 - A One-Time Close construction loan is designed to let you build a house on your own lot instead of buying an existing property. Do you want to design and build your own home using licensed contractors and plans created by a professional? 

One-Time Close Loan Tips

February 18, 2020 - Some new to the real estate market might assume they are not qualified to be approved for a construction loan, but these loans have the same kinds of terms and conditions that other mortgages do and you don’t need to have special credit scores to qualify.

One-Time Close Construction Loans for Veterans

February 9, 2020 - Veterans have multiple options when it comes to deciding which type of One-Time Close construction loan to choose from.  Military members who cannot occupy the home due to active duty requirements are still eligible for maximum financing.

One-Time Close Construction Loans: No Loan Limits?

January 21, 2020 - Is there really a construction loan that lets you build a house on your own lot with no loan limit? AND a zero-down loan at that? Believe it or not, such a loan DOES exist. It’s the VA Construction Loan, which can be offered as a One-Time Close mortgage.

There Are Different Kinds of One-Time Close Construction Loans

January 13, 2020 - A One-Time Close loan can help you build a home without the requirements some other construction loans have -- two applications, two loans, and two closing dates. These construction loans are for first-time home buyers AND experienced home owners alike.

SEE YOUR CREDIT SCORES   From All 3 Bureaus  

Do you know what's on your credit report?

Learn what your score means.


GET STARTED