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Buyers can have a brand new home built specifically to their liking, rather than settling on a resale home. There are no payment requirements during the construction period. The FHA also offers more flexible underwriting requirements with relaxed debt ratios.

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Now is the time to drop the interest rate on your 30-year mortgage or refinance into a 15-year home loan.

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

Buyer Benefits for FHA One-Time Close Loans

FHA Construction Loans for Building Your Dream Home

FHA One-Time-Close Loans - Buyer Benefits

Many potential borrowers aren’t aware that they have the option of building their dream home as a part of one, consolidated home loan. The FHA One-Time Close Loan offers them a number of advantages to help them do so.

Buyers Benefits

Buyers can have a brand new home built specifically to their liking, rather than settling on a resale home. Having a new home built from scratch used to mean securing a short-term construction loan and then refinancing with a conventional loan once the house was built. With the FHA’s Construction-to-Perm Loan, the borrower closes one time, reducing loan costs and ensuring that no re-qualification is needed once construction is complete. This protects against unseen qualification changes on credit and income. The loan converts to a permanent mortgage as soon as construction is complete, and the new home is built.

With the FHA One-Time Close Loan, homebuyers can also take advantage of the agency’s lenient qualifications, such as easy credit qualifying for scores, more flexible guidelines for homebuyers’ work histories, small escrow reserve requirements, and debt-to-income ratios up to 50 percent. The low, 3.5 percent down payment requirement is also available, which can be paid entirely via gift funds.

The FHA also offers more flexible underwriting requirements with relaxed debt ratios. Approved builders are able to make a contribution of up to 6 percent toward the borrowers’ closing costs & prepaid items, without having a dollar-for-dollar reduction from the loan amount. Owning the land prior to construction could mean less of a down payment. Equity in the land owned can go towards your down payment requirement, lowering the overall cost of construction considerably.

Borrowers have a less stressful payment schedule as well, since there are no payment requirements during the construction period—an interim that should not exceed 150 days. Additionally, there is no minimum bank balance reserve requirement, whereas most conventional loans require a 2- to 3-month reserve in the bank to show that buyers can handle payments in the event income is interrupted.

Interest rates are locked in before construction begins. So even if there is a fluctuation in the market during the interim period, buyers will not have to worry about higher monthly payments once construction is complete.

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 [email protected] 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 Loan Articles and Mortgage News

FHA Construction Loan Facts

May 27, 2020 - Do you want to have a house built for you from the ground up? This is an option, even for first-time home buyers. An FHA One-Time Close construction loan has a 3.5% down payment requirement, which is lower than you may be offered on a conventional loan.

One-Time Close Construction Loan Advice

February 29, 2020 - A One-Time Close construction loan is designed to let you build a house on your own lot instead of buying an existing property. Do you want to design and build your own home using licensed contractors and plans created by a professional? 

One-Time Close Loan Tips

February 18, 2020 - Some new to the real estate market might assume they are not qualified to be approved for a construction loan, but these loans have the same kinds of terms and conditions that other mortgages do and you don’t need to have special credit scores to qualify.

One-Time Close Construction Loans for Veterans

February 9, 2020 - Veterans have multiple options when it comes to deciding which type of One-Time Close construction loan to choose from.  Military members who cannot occupy the home due to active duty requirements are still eligible for maximum financing.

One-Time Close Construction Loans: No Loan Limits?

January 21, 2020 - Is there really a construction loan that lets you build a house on your own lot with no loan limit? AND a zero-down loan at that? Believe it or not, such a loan DOES exist. It’s the VA Construction Loan, which can be offered as a One-Time Close mortgage.