There are many different choices for home loans, and first-time home buyers should know their options before they decide on which loan to apply for. Do you know the difference between a rehab loan and a construction mortgage? Or a condo loan versus a mobile home loan?
FHA One-Time Close Construction Mortgages
These loans, also known as FHA Construction-to-Permanent loans, offer a single loan and closing date for borrowers who want to have a house built for them rather than buying an existing property.
FHA construction loans can be more complex that loans for existing real estate but for many the additional effort is worth it to have a home that is built especially for them.
First time home buyers can apply for these loans the same as any other FHA mortgage, and there are no additional down payment requirements for construction loans compared to other FHA loan products.
FHA Loans For Existing Construction Homes
Your FHA home loan choices include loans for real estate that has been built for a year or more and has had at least one owner-that is the definition of an existing construction loan.
You are not limited to applying for loans to buy a house that is a year older or more, but the technical term for FHA mortgages on homes that are a year old or more is “existing construction”.
The down payment requirement for existing construction loans is the same as for all other FHA purchase loans; 3.5% of the adjusted value of the property for borrowers with qualifying FICO scores (lender standards will also apply above and beyond this) of 580 or higher according to FHA loan program minimums.
FHA Loans For Condos, Manufactured Homes, Mobile Homes, And Townhomes
FHA condo loans allow you to buy a condo unit in a project that has already been placed on the FHA approved list or a project that can be added to that list.
The condo loan is different from an FHA mobile home loan-mobile home loans are classified as Title I loans, and have different standards than condo loans for things like square footage, age of the property, etc.
The down payment requirements for condo loans, mobile home loans, and other types of FHA mortgages are all identical-3.5% down for borrowers who meet FHA loan FICO score minimum requirements and lender minimums.
The FHA minimum is 3.5% of the adjusted value of the home down with a FICO score of 580 or better, 10% down (FHA minimum, lender standards will vary) for FICO scores between 500 and 579.