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The FHA One-Time Close Loan is a secure, government-backed mortgage program for construction projects. All FHA products have the same requirement, but lenders can place additional guidelines on these loans.

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May 24, 2018
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About FHA One-Time Close Construction Loans

A Construction Loan Backed By the Government

About FHA One-Time-Close Loans

The FHA One-Time Close Loan is a secure, government-backed mortgage program available for one-unit, stick-built primary residences, new manufactured housing for primary residences (no single wide mobile homes), and modular homes. It allows borrowers to finance for the construction, lot purchase (if necessary) and permanent loan into one loan and a single closing all at once with a minimum down payment of 3.5 percent (up to the FHA county lending limits).

Most construction loans require two separate closings—once to qualify for the construction itself, and again when converting into a permanent mortgage. When the builder gives the clear to close on a home and it’s time to move in, the buyer has to pay off the construction loan and apply for a new mortgage. These regular construction loans come with two closing dates, and require the homebuyer to requalify with credit checks, verification of employment, additional closing costs, etc.

The One-Time Close Loan gives buyers a new option. The FHA handbook, HUD 4000.1, refers to this as a “construction-to-permanent” mortgage. This is a single loan, with one single closing date, and a defined set of parameters for how the loan is to proceed during the construction phase and beyond. An escrow account is required to pay the expenses of construction and related fees, and the borrower will not be obligated to make mortgage payments until a specified time after the final inspection of the completed work (usually within 60 days).

Getting Ready

All FHA products have the same requirement, but lenders can place guidelines in addition to those minimum FHA standards. The usual advice about not having any late or missed payments 12 months leading up to your home loan application is appropriate in this case. To get ready for a construction loan, it’s good to work hard on reducing debt-to-income ratios, avoid applying for new lines of credit, and pay close attention to your credit report to avoid delays because of errors, outdated information, or other problems.

Contact Us About One-Time Close Loan Opportunities

We have done extensive research on both the FHA One-Time Close Construction program as well as the VA (Department of Veterans Affairs) One-Time Close Construction program. We spoke directly to the licensed lenders that originate these residential loan types in 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 licensed in your area to contact you.

Please note that investor guidelines for the FHA and VA 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? 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.

One-Time Close Construction Loans

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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.

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April 22, 2018 - One of the main issues with construction loans with two closing dates is that there is no guarantee that the borrower will qualify for the second loan. Borrowers who do not use FHA One-Time Close loans must be careful with credit and related financial issues.

FHA, VA, and USDA Construction Loan Options

April 16, 2018 - FHA One-Time Close construction loan options are available for borrowers who wish to apply for an FHA mortgage, but don’t want to buy an existing property. Not all borrowers understand they have options for this type of loan-options that include VA and even USDA construction loans for qualified applicants.

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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!