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FHA One-Time Close Construction Loans

FHA construction loan 2017

There is still time to consider an FHA construction loan in 2017. Those who are more interested in having a brand-new home built especially for them rather than purchasing an existing construction home with an FHA mortgage will be pleasantly surprised at the options available to them.

FHA construction loans are different than other types of FHA mortgages and can be a bit more complex, but thanks to the FHA One-Time Close construction loan this process isn’t as complicated as other types of construction loans. Why?

A Single Application and Closing Date For FHA One-Time Close Construction Loans

The FHA One-Time Close construction loan is referred to in the FHA loan handbook, HUD 4000.1, as a “construction-to-permanent” mortgage. Some construction loans require the borrower to qualify twice; once to pay for the construction and once for the mortgage itself. Under such loans there are two closing dates, etc.

Construction-to-permanent loans have a single loan, a single closing date, and a defined set of parameters for how the loan is to proceed during the construction phase and beyond. An escrow account is required to pay the expenses of construction and related fees, and the borrower in general will not be obligated to make mortgage payments until a specified time after the final inspection of the completed work (usually 60 days).

FHA One Time Close Construction Loans And The Maximum Mortgage Amount

According to HUD 4000.1, the maximum mortgage amount for these FHA construction loans are calculated as follows:

“The Mortgagee must use the lesser of the Property Value or the documented Acquisition Cost to determine the Adjusted Value.

The documented Acquisition Cost of the Property includes:

-builder’s price or the sum of all subcontractor bids and materials;
-value of the land as shown in the site value of the appraisal; and
-interest and other costs associated with a construction loan obtained by the Borrower to fund construction.

If the Property being constructed is Manufactured Housing, the builder’s price to build must include the sum of the cost of the unit(s) and all on-site installation costs.”

You read that correctly, FHA One Time Close mortgages are available for manufactured housing. Not all participating FHA lenders may offer all FHA loan products, so it’s best to discuss your needs with a loan officer. That is especially true if you are interested in a construction loan for manufactured housing.

Learn More About FHA, VA and USDA One-Time Construction Close to Permanent / Single-Close Construction Loans

One-Time Close Loans are available with VA, FHA and USDA Mortgages.  We have relationships with several large Mortgage Banking firms who specialize in these loans which also go by the following names: 1 X Close, Single-Close Loan or OTC Loan.

Our extensive research on these programs and their guidelines allow us to educate potential home buyers who want to explore purchasing a newly constructed home versus purchasing a resale home while utilizing the same down payments for each product type.

We are constantly updated on these programs and have extensive knowledge on VA (Department of Veterans Affairs), FHA (Federal Housing Administration) and USDA (United States Department of Agriculture) One-Time Close Construction programs.

We speak directly to the licensed lenders that originate these residential loan types in most states. They 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.

Please note that investor guidelines for the FHA, VA and USDA One-Time Close Construction Program only allows for single family dwellings (1 unit) – and NOT for multifamily units (no duplexes, triplexes or fourplexes).  Home types include:  Site-Built, Modular or Manufactured Homes.

In addition, the following are “NOT” allowed under these programs:
Kit Homes – Steel Framing Kits, Barndominiums, Log Cabin Homes, Shipping Container Homes, Stilt Homes, Solar or Wind Powered Homes.

Your response to authorizes us to share your personal information with a licensed mortgage lender that is familiar with your area to contact you.

  1. Send your first and last name, e-mail address, and good contact 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 veterans, the down payment is $0 up to the maximum amount that the debt ratio will allow – there are no maximum loan amounts as per the Department of VA. Most lenders will go up to $750,000. If not, the FHA down payment is 3.5% up to the maximum FHA Lending Limits for your county and the USDA down payment is $0 and based on maximum income.
Bruce Reichstein - FHA News Author

By Bruce Reichstein

October 30, 2017

Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.

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About was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

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