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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.

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November 20, 2019
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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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News and Updates for Homeowners

Build a House on Your Own Land With an FHA Loan

Build a House on Your Own Land With an FHA Loan
October 28, 2019 - Did you know it’s possible to use a low-down payment FHA mortgage to build a house on your own land? You can do this instead of buying an existing construction home and make the house you buy truly your own.

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, and you get the same protections on an FHA construction loan as you do any other type of FHA loan.

That means no penalty for early payoff, a lower interest rate than many conventional loans, and the ability to freely sell or transfer the property anytime you wish.

FHA loans to help you build your house on land you already own may be harder for some borrowers to find; a common complaint among some house hunters is that it can be difficult to find a participating FHA lender willing to work with you on an FHA construction loan.

Part of the problem in this area has to do with borrowers not knowing the right kind of real estate loan to ask for. If you want to build a house for you to live in as your primary residence, what you want to ask your loan officer about is the FHA One-Time Close construction loan or FHA OTC.

OTC loans allow qualified borrowers to apply for a single loan to cover both the mortgage and the costs of constructing the home. Not all FHA lenders offer these loans, but we know the ones that do, what the requirements are, and what it takes to get a construction loan approved.

And you don’t have to apply for an FHA construction loan if you are a veteran; there are VA loan versions of the One-Time Close construction loan that can help qualifying veterans build a house on their own land with zero money down up to the VA loan limits in your area.

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 [email protected] 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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