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

FHA One-Time Close Construction Loan Rules and Lender Requirements

May 3, 2020

FHA One-Time Close Construction Loan Rules and Lender Requirements
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.


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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