May 21, 2019

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FHA Loans, Wells, And One-Time Close Construction Loans

FHA Loans, Wells, And One Time Close Construction Loans

Borrowers who apply for FHA loans may not be clear on whether or not a property served by a well instead of being connected to the local utility is eligible for an FHA mortgage. Is the presence of a well a problem for FHA loan approval?

And what about FHA loan standards for FHA One-Time Close / Single-Close construction loans?

HUD 4000.1 contains guidelines for these issues including the acceptability of a property served by a well instead of a water utility. Borrowers will be relieved to know that FHA mortgage rules do not automatically rule out a property just because a well is present, but that well must meet both FHA minimum requirements and any applicable health code or other local ordinances.

For One-Time Close / Single-Close construction loans, FHA loan rules specify the following:

  • The home must be connected to the local utility whenever feasible;
  • There must be lead-free piping;
  • The well must deliver water flow of five gallons per minute over a minimum four-hour period;
  • The well must meet chemical/bacteria standards and/or state requirements where applicable.

There is a very important factor in these requirements-the rules listed here are FHA minimums only. State and local requirements will also apply and FHA loan rules do not address such regulations.

Borrowers who need to know the state/local requirements for wells (including shared wells) for a specific housing market will need to consult the local authority rather than the FHA to learn what may be needed. FHA loan rules never override the laws of your state, city, or county.

Furthermore, lender standards may also have a say in whether or not an FHA construction loan will be approved for properties served by wells or shared wells. You will need to discuss these factors with a loan officer to see what may be possible.

Learn More About FHA One-Time Close / Single-Close Mortgages

We have done extensive research on One-Time Close / Single-Close mortgage loans and spoke directly to the licensed lenders for 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 authorizes us to share your personal information with a licensed mortgage lender in your area to contact you.

Please note that the One-Time Close / Single-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.

Bruce Reichstein - Staff Writer

By Bruce Reichstein

May 21, 2018

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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