December 4, 2021

Vimeo Channel YouTube Channel

Get An FHA Mortgage In 2021 To Build Your Dream Home

FHA One-Time Close Construction Mortgage Basics

Are you considering your home loan options for 2021? There are a variety of choices but those who do not want to buy somebody else’s house and want to build their own can turn to an FHA One-Time Close mortgage to build from the ground up. Even first-time homebuyers can qualify to do this.

If you’re planning on a mortgage in 2021, there are higher FHA home loan limits available, and those who explore their options to build on their own land and choose not to have a range of other FHA home loan options you should seriously consider that can provide alternatives you might not be aware of. 

What are those options? House hunters can apply for an FHA mortgage to purchase a fixer-upper (using an FHA rehabilitation mortgage) and you can purchase a condo unit or mobile home.

Building Your Dream Home Using An FHA One-Time Close Mortgages

An FHA One-Time Close home loan is for those who want to build, not buy. You can apply for an FHA construction loan to build on your own land or purchase land to build on as part of the home loan transaction.

You basically plan this home loan with a contractor using plans you approve, pay for the materials and labor via draws from an escrow account, and your home is constructed from scratch.

There are VA and FHA One-Time Close mortgages. These loans usually feature slightly higher lender-required FICO scores, so be sure to ask your participating lender what is required to qualify. You won’t be allowed to act as your own contractor, so expect to need to search for a reputable local company.

Building instead of buying is more time consuming, but the extra time is worth it for many who would rather have a house built to their specific requirements instead of searching on the housing market for something that might be close to what they envision.

One Time Close mortgages aren’t the only option home buyers have in 2021–here are some other options for those who want to own a home in the new year.

FHA Condo Loans

You don’t have to apply for an FHA construction loan–there are FHA loans possible for condo units in approved condo projects or condo projects that are added to the FHA-approved list. 

FHA loan rules state that the condo owner’s association cannot require restrictive covenants from you such as “the right of first refusal” as any limitation in the agreements on how you sell or dispose of the property is not permitted under FHA loan rules. Ask about condo owner’s association rules and covenants to make sure you won’t get turned down for the mortgage because of too-restrictive rules in the condo project.

FHA Mobile Home Loan Options

Plenty of people would love to buy mobile home with an FHA mortgage in 2021 and there are FHA mortgages especially for this purpose. FHA mobile home loans are only designed for mobile homes, manufactured homes, and modular homes that will be affixed to a permanent foundation which meets FHA and local code requirements.

Mobile home loans under the FHA program require the home to be 400 square feet or more and the structure must be taxable or classifiable as “real property” even if it is not taxed as real estate or real property in that state.

FHA 203(k) Rehabilitation Mortgages

FHA Rehab loans are for owner-occupiers who want to buy or refinance a house and get funds to repair or renovate it at the same time. 

Be aware that while first-time homebuyers are definitely permitted and welcome to apply for the program, the lender may not let you act as your own contractor for the project and the funds disbursed from this loan can only be used for lender-approved purposes.

You may have access to two different kinds of FHA rehab loan–one is for disaster victims in federally declared disaster areas–but both types can be used together where applicable.

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. 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 allows 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.

Your email to authorizes to share your personal information with a mortgage lender licensed in your area to contact you.

  1. Send your first and last name, e-mail address, and contact telephone number.
  2. Tell us the city and state of the proposed property.
  3. 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.
  4. Are you or your spouse (Co-borrower) eligible veterans? If either of you are eligible veterans, 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.
Bruce Reichstein - FHA News Author

By Bruce Reichstein

December 7, 2020

Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.

Connect with Bruce:


Browse by Date:

About 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”.

5850 San Felipe Suite #500, Houston, TX 77057 281-398-6111. is privately funded and is not a government agency.

Share This