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.
Want More Information About One-Time Close Loans?
One-Time Close Loans are available for FHA, VA and USDA Mortgages. These loans also go by the following names: 1 X Close, Single-Close Loan or OTC Loan.
We have done extensive research on the FHA (Federal Housing Administration), the VA (Department of Veterans Affairs) and the USDA (United States Department of Agriculture) One-Time Close Construction loan programs. We have spoken directly to licensed lenders that originate these residential loan types in most states and each company has supplied us the guidelines for their products. We can connect you with mortgage loan officers who work for lenders that know the product well and have consistently provided quality service. If you are interested in being contacted by a licensed lender in your area, please send responses to the questions below. All information is treated confidentially.
FHANewsblog.com provides information and connects consumers to qualified One-Time Close lenders in an effort to raise awareness about this loan product and to help consumers receive higher quality service. We are not paid for endorsing or recommending the lenders or loan originators and do not otherwise benefit from doing so. Consumers should shop for mortgage services and compare their options before agreeing to proceed.
Please note that investor guidelines for the FHA, VA and USDA One-Time Close Construction Program only allow
s for single family dwellings (1 unit) – and NOT for multi-family units (no duplexes, triplexes or fourplexes). In addition, the following homes/building styles are not allowed under these programs: Kit Homes, Barndominiums, Log Cabin Homes, Shipping Container Homes, Stilt Homes, Solar (only) or Wind Powered (only) Homes.
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- Send your first and last name, e-mail address, and contact telephone number.
- Tell us the city and state of the proposed property.
- Tell us your and/or the Co-borrower’s credit profile: Excellent – (680+), Good – (640-679), Fair – (620-639) or Poor- (Below 620). 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 veteran’s, down payments as low as $0 may be available up to the maximum amount your debt-to-income ratio VA will allow – there are no maximum loan amounts as per VA guidelines. Most lenders will go up to $750,000 and review higher loan amounts on a case by case basis. If not, the FHA down payment is 3.5% up to the maximum FHA lending limit for your county.