The FHA One-Time Close Loan helps contractors with a smooth, start-to-finish process that allows consumers to purchase and build a home with a single mortgage. Builders can make contributions of up to 6% toward closing costs and prepaid items.

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

Builder Benefits for FHA One-Time Close Loans

FHA Construction Loans for Building Homes

FHA One-Time-Close Loans - Builder Benefits

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

FHA One-Time Close Construction Loan Limits Are Higher in 2024

January 23, 2024 - Do you want to build a home from the ground up? You can do this with low down payment requirements with an FHA One-Time Close Construction Loan. And construction loan borrowing power has increased in 2024 because FHA loan limits have increased from the previous year.

How to Find the Best Construction Loan Mortgage Rates

January 22, 2024 - What should you know about finding the best interest rates for your construction loan? A One-Time Close loan is more expensive than a purchase loan, and getting the best rate you can may help you save money over the lifetime of the loan.

Build, Buy, or Rent a Home in 2024?

January 21, 2024 - According to many financial pundits and housing market-related websites, 2024 is the year when more people get to consider owning a home thanks to (predicted) lower mortgage rates, more homes for sale, and the end of the seller’s market we saw in seasons past.

VA and FHA Construction Loans for Military Members and Veterans

January 18, 2024 - The ability to build a home from the ground up with no down payment requirement from the VA is a powerful incentive. Before you commit to a VA construction loan, discuss your no-money-down options with the participating lender.

How One-Time Close Construction Loans Differ

January 13, 2024 - Aside from the need to own or acquire land to build on, and the need to use professional contractors to do the work, how do single-close construction loans differ from buying an existing home? We explore some important details in this article.