Quantcast

What are the requirements for an FHA One-Time Close Construction Loan? These loans can be different that a standard FHA new purchase loan-there are builders to pay, inspections, and other issues that don't come with other types of mortgage loans.

FHA Mortgage Loan Rates

July 18, 2018
FHA Rates for July 18, 2018
Offering 30 Year Fixed Mortgages
Offering 15 Year Fixed Mortgages
Use our mortgage calculators
to see what you can afford!
FHA.com is a private company, is not a government agency, and does not make loans.

Prequalify Now!

Compare mortgage rates for your refinance or home purchase loan.

CHOOSE A LOAN TYPE

then
get
your

FREE CREDIT SCORE

Do you know what's on
your credit report?
The Path to Homeownership
FHA.com is a private company, is not a government agency, and does not make loans.

FHA Loan Articles

News and Updates for Homeowners

What Are the Requirements for an FHA One-Time Close Construction Loan?

What Are the Requirements for an FHA One-Time Close Construction Loan?
November 13, 2017 - What are the requirements for an FHA One-Time Close Construction Loan? These loans can be different that a standard FHA new purchase loan-there are builders to pay, inspections, and other issues that don't come with other types of mortgage loans.

There is, as the name of this type of mortgage loan implies, only one loan and only one closing date. Other types of construction loans will require two loans. One loan is for the purchase of the home (and land where applicable) with the second loan used to pay for the construction process.

That is not how the FHA One-time Close mortgage works. One-time Close loans, also referred to by lenders as a construction-to-permanent loan, have just one loan. This eliminates the need to have the borrower to be credit-qualified twice for two separate loan applications. Less risk for the borrower, an easier approval process for the lender.

The mortgage closing happens prior to any construction. That allows the purchase of the land, followed by the construction phase. This type of home loan requires an escrow account so that funds to pay for the home building process and be distributed as needed.

Borrower Requirements For FHA One-Time Close Mortgages

According to the FHA official site, “The borrower must have contracted with a builder (must be a licensed general contractor) to construct the improvements”. FHA loan rules allow a borrower to act as their own contractor, but only she is “a licensed general contractor” according to the FHA official site.  * While the FHA guidelines may allow this, mortgage companies use the FHA standards as the baseline and then can add additional requirements which is known as "Overlays".  Due to the many liabilities that arise out of a licensed general contractor acting as their own contractor, all known FHA One-Time Close Lenders at this time will not allow a borrower to act as their own contractor. 

One-time Close loans require the borrower to buy the land “at the closing of the construction loan, or have owned the land for six months or less at the date of case number assignment”.

Occupancy Required

FHA One-time Close mortgages can’t be used for a home you don’t intend to occupy. FHA mortgage loans are generally intended for homes that at least one borrower on the loan will use as their primary residence.

However, it’s important to point out that FHA loan rules for this type of transaction allow the construction of a property with as many as four living units, but the borrower must live in at least one of them as his or her home address.

FICO Score Requirements

FHA One-time Close loans are subject to FHA FICO score requirements but FHA loan program minimums are not the only standards which apply. Lender requirements for this type of home loan may be higher than FHA minimums, and state/local law may also dictate how this type of transaction may proceed. Check with your loan officer to see what may be a factor in this type of home loan.

Learn More About FHA One-Time Close Construction Loans

We have done extensive research on FHA One-Time Close mortgages and have compiled a list of licensed lenders for most states. These are qualified mortgage loan officers who work for lenders that know the product well.

Each company has supplied us the guidelines for their product. If you are interested in being contacted by one licensed lender in your area, please respond to the below questions to save time. All information is treated confidentially.

Your response to onetimeclose@fha.com authorizes FHA.com to share your personal information with a licensed mortgage lender in your area to contact you.

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

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 credit score and/or the Co-borrower’s credit score, if known. 620 is the minimum qualifying credit score for this product.

4. Are you or your spouse (Co-borrower) eligible veterans?

5. If either of you are eligible veteran’s, the down payment is $0 up to the maximum VA lending limit for your county. If not, the FHA down payment is 3.5% up to the maximum FHA lending limit for your county.

------------------------------

RELATED VIDEOS:
You're Almost There When You Get Your Loan Approval
Learn About the Mortgage Insurance Premium (MIP)
Pre-approval Starts the Mortgage Process

FREE CREDIT SCORES   From All 3 Bureaus  

Do you know what's on your credit report?

Learn what your score means.


FHA.com Reviews

FHA.com is a one-stop resource for homebuyers who want to make the best decisions when it comes to their mortgage. With our detailed, mobile-friendly site, individuals can access information about different FHA products, the latest loan limits, and numerous other resources to make their homebuying experience easier. Take a look at some of the reviews from other FHA.com visitors!