Where do you get an FHA construction loan? Borrowers who don’t want to purchase an existing construction property (one that has been previously owned) or a new construction home (one that is brand new and has not been owned or occupied previously) will definitely be interested in learning where to get an FHA construction loan to buy a single family home.
The short answer is that an FHA construction loan is definitely possible under FHA loan program guidelines, but you will need to find a participating FHA lender willing to issue you the loan. Not all FHA lenders offer construction loans so you’ll have to shop around if your first choice in a financial institution doesn’t offer this type of FHA mortgage.
There are two kinds of FHA construction loans. One type is a traditional project which involves two loans-one to get through the construction phase and a second loan which acts as the traditional mortgage for the home. Having to qualify for two loans can be more challenging for some borrowers. Fortunately there is another type of FHA construction loan that has only one loan for the entire process.
These mortgages are called “Construction To Permanent” loans, and the FHA official site describes how Construction To Permanent loans work:
“A construction to permanent mortgage combines the features of a construction loan (a short-term interim loan for financing the cost of construction) and the traditional long-term permanent residential mortgage with a single mortgage closing prior to the start of construction.”
The borrower is required to work with a licensed general contractor. According to FHA loan rules, “The borrower may act as the general contractor, only if the borrower is also a licensed general contractor. The borrower must be purchasing the land at the closing of the construction loan, or have owned the land for six months or less at the date of case number assignment. At closing, after funds are disbursed to cover the purchase of the land, the balance of the mortgage proceeds must be placed in an escrow account to be disbursed as construction progresses.”
Our site has done some extensive research on this product and have compiled a list of licensed FHA One-Time Close lenders for most states. These are qualified mortgage loan officers who work for lenders that know the product well. Each company has supplied me 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 firstname.lastname@example.org authorizes fhanewsblog.com to share your personal information with a licensed mortgage lender in your area to contact you. Please note that the FHA One-Time Close Construction Program only allows for single family dwellings (1 unit) – and NOT for multifamily units (no duplexes, triplexes or fourplexes).
- Send your first and last name, e-mail address, and contact telephone number.
- Tell us the city and state of the proposed property.
- 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.
- 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-https://www.fha.com/lending_limits