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Are you thinking of using an FHA One-Time Close Construction loan to have a house built for you in 2020? This type of home loan is different than FHA new purchase loans for existing construction, but it’s definitely worth considering.

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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 for 2020

December 15, 2019

FHA One-Time Close Construction Loans for 2020
Are you thinking of using an FHA One-Time Close Construction loan to have a house built for you in 2020? This type of home loan is different than FHA new purchase loans for existing construction, but it’s definitely worth considering.

FHA construction loans can be a bit more complex, but thanks to the FHA One-time Close construction loan this process isn't as complicated as other types of construction loans. Why?

There Is Only One Application and Closing Date For FHA One-Time Close Construction Loans in 2020

The FHA One-Time Close construction loan (also known as a "construction-to-permanent" mortgage) does NOT require the borrower to qualify twice. For other types of construction loans the borrower applies once to pay for the construction, then applies again for the mortgage itself.

Under such loans there are two closing dates, and two qualification processes. That’s something that understandably makes some borrowers nervous-what if there are complications with the second application?

FHA Construction-to-permanent loans avoid all that by using a single loan, one closing date, and specific steps and requirements for how the loan is to proceed into construction phase and what happens once the work is completed.

FHA One-Time Close Mortgage Escrow Account Requirements

An escrow account is required to pay the expenses of construction and related fees. There must be “draws” to pay for the appropriate phase of the work, and a payment timeline that you and your loan officer will discuss.

Not the Same Payment Requirements as Other Mortgages

Generally speaking, the borrower is not to begin mortgage payments until a specified time after the final inspection of the completed work (usually 60 days). You will negotiate the specifics of this with your lender.

Maximum Mortgage Amounts for 2020

FHA One-Time Close construction loan maximums are calculated as described in HUD 4000.1:

"The Mortgagee must use the lesser of the Property Value or the documented Acquisition Cost to determine the Adjusted Value."

The documented Acquisition Cost of the Property includes:
  • Builder’s price or the sum of all subcontractor bids and materials;
  • Value of the land as shown in the site value of the appraisal; and
  • Interest and other costs associated with a construction loan obtained by the Borrower to fund construction.
Construction Loans at OneTimeClose.com FHA, VA, and USDA: One-Time Close Loans

Want More Information About One-Time Close Loans?

We have done extensive research on the FHA (Federal Housing Administration), the VA (Department of Veterans Affairs) and the USDA (United States Department of Agriculture) One-Time Close Construction loan programs. We have spoken directly to licensed lenders that originate these residential loan types in most states and each company has supplied us the guidelines for their products. We can connect you with mortgage loan officers who work for lenders that know the product well and have consistently provided quality service. If you are interested in being contacted by a licensed lender in your area, please send responses to the questions below. All information is treated confidentially.
 
FHA.com provides information and connects consumers to qualified One-Time Close lenders in an effort to raise awareness about this loan product and to help consumers receive higher quality service. We are not paid for endorsing or recommending the lenders or loan originators and do not otherwise benefit from doing so. Consumers should shop for mortgage services and compare their options before agreeing to proceed.
 
Please note that investor guidelines for the FHA, VA, and USDA One-Time Close Construction Program only allows for single family dwellings (1 unit) – and NOT for multi-family units (no duplexes, triplexes or fourplexes). In addition, the following homes/building styles are not allowed under these programs:  Kit Homes, Barndominiums, Log Cabin Homes, Shipping Container Homes, Stilt Homes, Solar (only) or Wind Powered (only) Homes.
 
Your email to [email protected] authorizes FHA.com to share your personal information with a mortgage lender licensed in your area to contact you.
  1. Send your first and last name, e-mail address, and contact telephone number.
  2. Tell us the city and state of the proposed property.
  3. Tell us your and/or the Co-borrower’s credit profile: Excellent – (680+), Good - (640-679), Fair – (620-639) or Poor- (Below 620). 620 is the minimum qualifying credit score for this product.
  4. Are you or your spouse (Co-borrower) eligible veterans? If either of you are eligible veterans, down payments as low as $0 may be available up to the maximum amount your debt-to-income ratio per VA will allow – there are no maximum loan amounts as per VA guidelines.  Most lenders will go up to $750,000 and review higher loan amounts on a case by case basis.   If not, the FHA down payment is 3.5% up to the maximum FHA lending limit for your county.

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