What is the FHA One-Time Close Program? In our previous blog post, we discussed the basics of this FHA construction loan program-what it means to the borrower seeking an FHA new construction loan and how having a single loan (instead of two loans as with typical construction loan situations) can be an advantage for the borrower.
FHA One-Time Close mortgages are for those who want an FHA construction loan for a property that has yet to be built. They can be more complex than typical new purchase FHA loans, but for those who need a construction loan, One-Time Close has definite advantages.
They include a single closing date, and an early mortgage loan interest rate lock that can potentially safeguard the borrower against rising mortgage rates should they occur.
Who is eligible for an FHA One-Time Close loan?
One-Time Close mortgages generally require the borrower to have a minimum FICO credit score at or near 620. Borrowers with FICO scores below 660 may be required, depending on the lender and other factors, to have at least two credit scores. The lowest FICO score is used for loan approval decisions.
Depending on the lender, there may be guidelines about what type of property may be built using an FHA One-Time Close mortgage loan. You may find that stick-built homes are given preference with this type of FHA construction loan. A stick-built home, also known as a site-built home, is a typical construction project, with the home built on site as opposed to having a modular home which is shipped to the home’s location and assembled in sections.
Depending on the lender, you may find that modular or manufactured homes are not eligible for FHA One-Time Close loans.
For the construction phase of the home purchased with a One-Time Close mortgage, an approved builder must be used. Potential FHA borrowers with questions about this aspect of the loan should have a discussion with the lender, as requirements and procedures for approved builders may vary from place to place.
Appraisal issues for these types of home loan transactions are different that purchase existing construction homes. Appraisals and other compliance requirements may be conducted “as completed”, so borrowers will need to discuss the timing of those activities with the lender.
Borrowers are still required to pay for appraisal fees, compliance inspection fees, and related services as part of the FHA loan process with One-Time Close loans. Escrow may be required, and you’ll need to discuss those arrangements with your participating lender.
Our site has done some extensive research on this product and have compiled a list of licensed FHA One-Time Close lenders for most states. These are qualified mortgage loan officers who work for lenders that know the product well. Each company has supplied me 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. Responding to onetimeclose@fhanewsblog.com authorizes fhanewsblog.com to share your personal information with a licensed mortgage lender in your area to contact you. Please note that the FHA One-Time Close Construction Program only allows for single family dwellings (1 unit) – and NOT for multifamily units (no duplexes, triplexes or fourplexes).
- 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 credit score and /or the co-borrower's credit score, (if you know it). 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, the down payment is $0 up to the maximum VA lending limit for your county. If not, the FHA down payment is 3.5% up to the maximum FHA lending limit for your county - https://www.fha.com/lending_limits
