One-Time Close Loan
The FHA One-Time Close Construction-to-Permanent Loan is a government-backed mortgage program designed for constructing one-unit stick-built primary residences, new manufactured homes (excluding singlewides), and modular homes. This loan allows borrowers to finance the construction of their home, purchase the lot (if necessary), and convert the loan into a permanent mortgage—all in a single closing process.
Traditionally, having a home built from the ground up required securing a short-term construction loan followed by refinancing with a conventional loan once the house was completed. The One-Time Close Construction-to-Permanent Loan simplifies this process by allowing the borrower to close just once. This single closing reduces overall loan costs and eliminates the need for re-qualification once construction is finished. The loan automatically converts to a permanent mortgage upon the completion of the new home, and no payments are required from the borrower during the construction phase. Additionally, equity from any previously owned land can be used as a down payment.
This type of loan provides homebuyers with peace of mind, as it avoids the complications and potential changes related to securing a second loan. The interest rate is locked in before construction starts, ensuring stability in monthly payments.
The FHA One-Time Close Construction Loan offers several benefits typical of FHA-insured loans, including:
- Easier Credit Qualification: Borrowers can qualify with credit scores as low as 620.
- Low Down Payment Requirement: A minimum down payment of 3.5% is required, making it accessible for many buyers.
- Flexible Guidelines: The program has more lenient rules regarding borrowers’ work histories and small escrow reserve requirements.
- Higher Debt-to-Income Ratios: Borrowers can have debt-to-income ratios of up to 50%.
If you are interested in being contacted by a licensed lender in your area regarding the One-Time Close Construction Loan, you can provide the following information to facilitate the process:
- Your first and last name, email address, and contact telephone number.
- The city and state of the proposed property.
- Your credit score and/or your co-borrower’s credit score, if known (minimum qualifying score is 620).
- Whether you or your spouse (co-borrower) are eligible veterans.
If you or your spouse are eligible veterans, you may qualify for a $0 down payment up to the maximum VA lending limit for your county. If not, the FHA down payment will be 3.5% up to the maximum FHA lending limit for your county.
FHA One-Time Close Construction Program is limited to single-family dwellings, not multifamily units.
