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.
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 firstname.lastname@example.org 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.