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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.

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FHA Construction Loan Rules and Lender Requirements

April 28, 2018 - 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.

Did you know that FHA loan rules technically allow certain things that your lender or financial institution may not? FHA minimum standards for home loans (including construction loans) aren’t the only ones which must be heeded.

For example, the FHA home loan rulebook states that a construction loan is technically available to build a home with up to four units:

“The Borrower may finance the purchase of an existing one- to four-unit residence, and may also finance construction of a one- to four-unit residence through a Construction to Permanent Mortgage.”

That’s on page 130 under the heading General Mortgage Insurance Eligibility. But your chosen participating FHA lender may restrict construction loans to single-unit residences. They may further restrict these loans to stick-built housing, and refuse to write loans for mobile homes or manufactured housing.

That is one reason why it can be a big help to pre-qualify for an FHA loan and have a conversation with a loan officer about your financial needs and goals for the loan.
This is the same idea that informs FICO score requirements for FHA mortgages. The FHA has a minimum standard for maximum financing-borrowers with FICO scores at 580 or higher are technically able to get maximum financing.

But your lender’s FICO score requirements may be higher depending on the lender, and other factors. For FHA One-Time Close construction loans, you may find lenders requiring FICO scores in the mid 600s as a condition of loan approval.

Learn More About FHA One-Time Close Construction Loans

We have done extensive research on FHA One-Time Close mortgages and spoke directly to the 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.

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