December 15, 2019

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Types Of Homes You Can Buy Or Build With An FHA Mortgage

Types Of Homes You Can Buy Or Build With An FHA Mortgage

What types of home can you purchase or build with an FHA mortgage? For the purposes of this article, we are talking about the status of the property rather than the property type.

It’s true that FHA loans are available for condo units, mobile homes, and manufactured homes, and you can also use an FHA One-Time Close construction loan to build a home from the ground up on your own land.

You can use an FHA mortgage to buy or build a single-unit home or you can purchase a property with as many as four living units.

But FHA home loans also take into account the status of the property as an existing construction home, new construction, etc.

The list of property types includes:

  • Proposed Construction where no concrete or permanent material has been placed. Digging of footing is not considered permanent.
  • Under Construction: projects in the time period from the first placement of permanent material to 100 percent completion with no Certificate of Occupancy (CO) or equivalent.
  • Existing Less than One Year: 100% complete and has been completed less than one year from the date of the issuance of the CO or equivalent. The Property must have never been occupied.
  • Existing Construction: homes that have been completed and occupied at least once before the current sale.

Depending on the type, certain requirements may apply that require the lender to collect certain documentation. For proposed construction, to move the loan forward the lender must obtain:

  • Copies of the building permit and Certificate Of Occupancy (CO) or equivalent;
  • Three inspections (footing, framing and final) performed by an FHA Roster Inspector on form HUD-92051, Compliance Inspection Report (for Modular Housing, footing and final only);
  • Three inspections (footing, framing and final) performed by the local authority with jurisdiction over the Property (for Modular Housing, footing and final only); or
  • Documentation of a 10-year warranty and final inspection issued by the local authority with jurisdiction over the Property or an FHA Roster Inspector.

For under-construction properties, the lender must collect the following documentation:

  • Copies of the building permit and CO (or equivalent); or
  • A 10-year warranty and final inspection issued by the local authority with jurisdiction over the Property or an FHA Roster Inspector.

For properties classified as Existing for Less than One Year (100 Percent Complete) the lender is required to document:

  • The building permit and CO (or equivalent); or
  • A 10-year warranty and final inspection issued by the local authority with jurisdiction over the Property or an FHA Roster Inspector; or
  • An appraisal evidencing Property is 100 percent complete.

The procedures and requirements listed here may be supplemented by rules of your financial institution, state law, or other regulations.

Ask your lender if there are additional requirements based on the property type you are interested in.

Joe Wallace - Staff Writer

By Joe Wallace

November 21, 2019

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.

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FHANewsBlog.com 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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