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 One Time Close Construction Loans
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