FHA construction To Permanent loans in 2018 are a great option for those who want to buy a home but aren’t interested in purchasing existing construction properties. If having a home built for you sounds better than buying one that already exists, the FHA Construction-To-Permanent loan, also known as an FHA One-Time-Close loan / Single-Close loan, might be right for you.
FHA Construction To Permanent Loan Requirements
The basic credit qualifying guidelines for FHA One-Time Close mortgages may vary more among participating FHA lenders. You may find a minimum FICO score requirement of 620 or higher depending on the lender, and in some cases you may learn that a lender has a minimum FICO score benchmark of 660 or better and that two FICO scores may be required.
Credit requirements can be higher for this type of loan, so it’s best to prepare accordingly. The usual advice about not having any late or missed payments 12 months leading up to your home loan application is excellent, but borrowers should know that it’s a very good idea to assume that higher standards will apply at application time.
To get ready for a construction loan, it’s good to work hard on reducing debt-to-income ratios, avoid applying for new lines of credit, and pay close attention to your credit report to avoid delays because of errors, outdated information, or other problems.
Not all lenders will support One Time Close construction loans for all eligible property types. Some participating FHA lenders may approve these loans for modular or manufactured homes, while others may only allow construction loans for “stick-built” housing which is what typical suburban homes are. Check with your chosen FHA lender to see what options are available to you in this area. You may also find restrictions on the number of living units allowed for such projects.
Escrow Account Requirements
Escrow accounts are required for FHA One-Time Close mortgages in order to pay and track funds paid to contractors, inspectors, etc. State law and lender requirements will have a say in how your escrow account is to be set up and managed. It’s best to learn the requirements and procedures for these transactions before you apply for the loan so you can make the most informed decisions possible going forward.
The home you have built with an FHA construction loan will be required to meet local, state, federal, and FHA guidelines. The home will be inspected as a condition of loan approval, and any required corrections may warrant an additional compliance inspection.
Anticipate these expenses in your pre-application budget and planning stages; it’s never safe to assume that there won’t be issues that need correction just because the home has been built from the ground up; regulatory changes, new legislation, and other factors may affect any construction project including yours.
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 email@example.com authorizes us to share your personal information with a licensed mortgage lender that is familiar with your area to contact you.
- Send your first and last name, e-mail address, and good contact 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 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.