One-Time Close Loans | FHA and VA Construction Loans
VA and FHA One-Time Close Construction Loans

The FHA has a maximum mortgage amount that it will insure for One-Time Close loans. This is known as the FHA lending limit and it can change from one county to the next.

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VA Loan - One-Time Close Construction Loan
FHA Loan - One-Time Close Construction Loan

The "FHA" One-Time-Close Loan

Single Close Loans allow you to wrap up the financing of lot purchase, construction and permanent mortgage into one loan insured by the FHA. Under this option, you can apply for a 15- or 30-year loan with a fixed rate that’s locked in before construction on your new home begins.

With a Single Close Loan comes a single set of closing costs. These costs can be partially paid for you, since the FHA allows interested party contributions (sometimes referred to as seller concessions, although commonly paid by the builder in the case of a construction-to-permanent loan) up to 6 percent of the total acquisition cost.

Learn About the One-Time Close Constuction Loan
"The FHA has a maximum loan amount that it will insure, which is known as the FHA lending limit. These loan limits are calculated and updated annually."

What is an FHA Loan?

Beaver talks about One-Time Close loansThe Federal Housing Administration (FHA) is a government agency within the U.S. Department of Housing and Urban Development (HUD). In an effort to stimulate America’s housing market and assist Americans in securing safe and affordable housing, the FHA insures mortgages on single and multifamily homes.

The FHA offers homebuyers a number of mortgage options, including the One-Time Close Construction-to-Permanent loan. The loan is provided by private, FHA-approved lenders and is backed by the FHA, giving lenders peace of mind about approving borrowers for large mortgages.

Who Can Apply

While only veterans and rural residents can apply for loans with the VA, securing a Single Close Loan with the FHA is easier for other homebuyers. It also allows you to take advantage of the FHA’s lenient borrower guidelines.

There is a low down payment requirement of 3.5 percent. If you already own the land on which your new home is being built and have equity in the land, the equity can be used towards the 3.5% down payment. Furthermore, the down payment can be paid for entirely with "gift funds."

Most lenders typically have a credit score requirement of at least 620. The FHA also requires proof of employment and income, and no late or missed payments in the last 12 months.

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There are a lot of myths about home loans in general and a few pervasive ones about construction loans worth dispelling. What do you need to know when you commit to building your own home from the ground up?

Construction Loan Approval Rules For Employment And Income

If you want to build your own home, it’s good to know that doing so means taking some extra time to work on your credit and employment history before applying. Construction loans are harder to qualify for with income and employment for some, what do you need to know before you start the process? We examine some key points.

Construction Loan Interest Rates For The Rest Of 2024

Many financial pundits and mortgage blogs discuss the current state of construction loan interest rates. Some of these sites make predictions, including noting that One-Time Close construction loan interest rates will likely stay around the mid-6 % range for the rest of 2024. Those hoping to build a home from the ground up this year with interest rates closer to pre-pandemic levels are likely to be disappointed. What should borrowers expect going forward? Is it smart to delay a construction loan until the Fed cuts rates again?


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