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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.

FHA Mortgage Loan Rates

September 25, 2018
FHA Rates for September 25, 2018
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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 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 Loan Articles and Mortgage News

Are There FHA Loans for Investment Properties?

September 25, 2018 - This is a common question, and at first glance, FHA loan rules do prohibit using single family FHA mortgages to purchase investment real estate. But much depends on the buyer’s definition of investment property compared to the FHA view.

FHA Down Payment Rules and Options

September 24, 2018 - FHA home loans are attractive to many borrowers because the FHA guidelines are more forgiving with FICO scores, and a lower down payment is required than for some other mortgages. But your down payment requirements aren’t just set by the FHA; lender standards also have a say.

What if I Have an Account Collection in My Credit History?

September 20, 2018 - FHA borrowers who have experienced this negative credit event often wonder if it account collections in their credit histories will hurt their chances for FHA home loan approvals; much depends on the age, the amount, circumstances, and lender requirements in this area.

Is it the Right Time to Apply for an FHA Mortgage?

September 18, 2018 - There are some important questions to ask yourself as you begin the planning stages for a new FHA home loan. If you are going into the process without the answers to these important questions, you might not be ready to apply for a new loan just yet.

What are Compensating Factors for FHA Loan Approval?

September 14, 2018 - Borrowers who have high debt ratios, and/or FICO score issues may still be able to be approved for an FHA mortgage loan but the lender may require one or more compensating factors to justify loan approval.

FHA.com Reviews

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!