Builder Benefits for FHA One-Time Close Loans
FHA Construction Loans for Building Homes

The FHA Construction-to-Permanent program is an avenue that many builders should explore when looking for additional business. By partnering with pre-approved homebuyers, contractors can take advantage of a smooth, start-to-finish process that allows consumers to purchase and build a home according to their liking, all in a single mortgage.
Builder Benefits
When building a home, most conventional mortgages require the borrower to qualify twice—once for the construction loan and again for the purchase. The FHA One-Time Close Loan, on the other hand, skips the tedious requalification process, which involves a second credit check and presentation of documents. Not only is this a cost and time saving step, but it also protects builders involved in the loan against unforeseen circumstances, such as buyers losing their jobs or taking a hit to their credit scores.
Sellers and builders can make contributions of up to 6 percent toward the homebuyer’s closing costs and prepaid items. Any contribution funds beyond that are reduced, dollar-for-dollar, from the loan amount. The high, 6-percent threshold allows buyers to receive the same financing without having to forfeit contributions.
Borrowers can take advantage of FHA’s lenient underwriting criteria, such as lower debt-to-income ratios compared to other conventional loan types. These perks make the FHA One-Time Close Loan appealing to many potential homebuyers, making it an opportunity for builders to gain contracts.
When financing with a Construction-to-Permanent loan, funds are drawn in phases, up to 5 times. A draw schedule is created by the lender, which the buyer and builder agree to. This ensures that all contractors are paid on time, as the project progresses.
Among the many advantages that come with an FHA loan, builders and buyers understand that the low down payment requirement is 3.5 percent. Additionally, the entire amount can be covered in gift funds which attracts more consumers.
There is a growing number of individuals that have an immediate need for small- to mid-size homes built from scratch. FHA.com works with licensed FHA lenders who specialize in the One-Time Close Loan process to pre-approve potential homebuyers looking for builders to do the job. Builders have an opportunity to be first in line to be paired up with these individuals and take on projects that would otherwise fly under the radar.
For Builders interested in receiving the FHA One-Time Close Builder registration approval form, please send your request to [email protected].

One-Time Close Construction Loans

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FHA Loan Articles and Mortgage News
November 28, 2023 - What can a first-time homebuyer use an FHA mortgage to do? You can use it to build or buy a home. You can also use an FHA loan to renovate a home you already own or want to purchase and renovate. You can refinance and even apply for a reverse mortgage.
October 29, 2023 - Whether considering a One-Time Close construction loan or an FHA 203(k) rehabilitation mortgage, you’ll want to keep some important things in mind before deciding on the right contractor. Some experts recommend getting bids from three different contractors.
October 19, 2023 - The recent difference in mortgage rates between fixed and adjustable rate mortgages has been narrower than usual. But in the second week of October, that changed. As a result, ARM loan applications increased by some 15%, according to published sources.
October 16, 2023 - With an FHA mortgage, your low down payment options include 3.5% of the price of the home if your FICO scores are 580 or higher (FHA loan program rules, not lender standards), and you get this loan with no early payoff penalty should you choose to refinance later to get a better interest rate.
October 14, 2023 - Some would rather build from the ground up using an FHA One-Time Close construction loan where others might decide to buy an existing home using an FHA adjustable rate mortgage. These are just two options, but they are among the most common.