FHA Construction Loan

What is an FHA Construction Loan and how does it work?

An FHA One Time Close Construction Loan is an all in one loan that allows you to get a construction loan and a permanent loan all wrapped into one loan. This is a huge advantage given the fact that most construction loans to build a home require two closings. So you will save time and money by doing a 1-time close.

The Way FHA Construction Loan Works


You can get financing to build the house and purchase the land all in one loan. Up to a maximum loan amount in your county, maximum loan amounts range from:

$271k–$750k. If you wish to purchase the land and include it with the building loan it will be 3.5% down of the total project cost.

So if your land and home costs $200k your down payment is only 3.5%, which is $7,000

Closing costs are rolled into the loan and the interest payments during construction can also be rolled into the loan.

If you already own the land and have equity built up in your land we will give you credit for land equity so in most cases you will not have to put a down payment.


Requirements – FHA 1 Time Close Construction Loan

  • A 640+ credit score is required a
  • Maximum debt ratio of 45%
  • No bankruptcy in the last two years
  • No foreclosure in the last three years
  • No major credit collections over $5,000 in the last two years
  • No open judgments or tax liens


Steps to Obtain Loan

  • Make an application and get approved
  • Have your builder apply with us and get approved
  • Submit blue print and cost budget
  • Contract on land if applicable that you are buying
  • Go to closing on loan
  • Construction starts:
  • Draw schedule is issued
  • Build sets up build in phases, during each phase builder draws funds upon your release and inspection
  • Once home is complete loan automatically converts over to a permanent mortgage and you are done
  • Taxes and insurance are included in house payment
  • Rates can be locked in advance.
  • There are no penalties for early payoffs
  • The loan will be based on a fixed rate mortgage with the best terms available by the time of closing.


FHA Loan Application

FHA 1 Time Close Construction Loan