FHA home loan options in 2020 don’t have to be limited to getting a home loan to purchase existing construction property; there is a way to apply for an FHA mortgage that lets you have a home built to suit from the ground up on your own land.
These construction home loans, known as One-Time Close construction loans, are offered by the FHA, the VA, and even the USDA and can help even a first-time homebuyer get a house built to their specifications with a low down payment.
Yes. you read that correctly. First-time home buyers are permitted to apply for the One Time Close construction loan. So are experienced homeowners.
One-Time Close construction loans are good for borrowers who want a home that meets their standards, but the loan is best for those who are able to take additional time to get into their new home. The trade-off for having just the right property built for you is the time it will take from planning to move-in.
FHA Construction Loans: Worth The Effort
The loan approval process and the construction itself will take time–likely more time than you could wait when you buy an existing house.
But these One-Time Close loans offer more flexibility in areas such as floor plans, the types of appliances you wish to furnish the home with, garage design where appropriate, and much more. That flexibility is worth the investment for many borrowers.
Construction Loans: Certain Restrictions May Apply
Yes, these loans can feature certain restrictions, but not all of them are FHA rules–some are lender requirements. For example, your participating lender may not let a borrower act as her own contractor, and some lenders don’t approve construction loans for multi-unit properties.
It’s best to discuss such rules with a loan officer before you commit to the project so that you know the parameters and can work accordingly.
Obtaining Permits May Add Time To Your Projects
Some high-cost housing markets feature longer-than-usual waiting times to get permits approved. Ask your lender about this process and how much extra time you may need to build into your home loan to accommodate the length of time it takes to get the appropriate city or state paperwork.
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 email@example.com 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.