What is the maximum loan amount you can borrow with an FHA One-Time Close / Single-Close construction loan? The actual dollar amount is not fixed, it depends on variables including the FHA loan limits in a given housing market and whether or not the borrower is buying land in conjunction with the project.
Calculating the Maximum Loan Amount For An FHA One-Time Close / Single-Close Construction Loan
The FHA loan rules for One-Time Close / Single-Close loans, also known as construction-to-permanent mortgages, are found in HUD 4000.1 and include a breakdown for lenders on how to calculate the maximum mortgage loan.
The loan limit takes into account the borrower’s down payment and the Loan-To-Value ratio (LTV). HUD 4000.1, page 445 instructs the lender:
“The maximum mortgage amount is calculated using the appropriate purchase Loan-to- Value (LTV) percentage of the lesser of the appraised value or the documented Acquisition Cost.”
The Documented Acquisition Cost Calculation For An FHA One-Time Close / Single-Close Mortgage
The documented Acquisition Cost of the Property includes the expenses incurred by the builder to construct the home, but also any extras the borrower pays for, “over and above the contract specifications and/or out-of- pocket expenses not included in the builder’s price to build”.
The cost of land already owned by the borrower is also a factor, and the appraised value of the land can be used in the calculation instead of the cost according to FHA guidelines. Lender requirements may vary.
In cases where the borrower is financing the land, the closing costs associated with that financing can also be included in the calculation.
FHA One-Time Close mortgage loan rules in this area may be supplemented by lender requirements, and state law may have a say in how such transactions are carried out depending on your housing market.
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 firstname.lastname@example.org 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.