December 28, 2020
Do you want to own your own home in 2021? The FHA Single-Family home loan program is an excellent option for future homeowners who want to build or buy a home in the new year.
What are your options for buying a house with an FHA mortgage? Those who have good credit (620 or better) and are not in a hurry to move in as soon as possible should consider applying for an FHA One-Time Close (OTC) construction loan to build a home from the ground up on your own land or on a lot you buy in conjunction with the construction loan.
Another option for those who aren’t in a hurry to move in is the FHA 203(k) Rehabilitation mortgage, which is intended to help you buy a fixer-upper and renovate it to meet state and FHA requirements.
Buying a fixer-upper with an FHA mortgage can help borrowers save money on the new purchase loan, but it can also help you purchase a more customized home.
Those who need a low down payment but don’t want to wait out the construction process and need a home sooner rather than later should consider applying for a loan to purchase existing construction.
You can buy a home with as many as four living units with a low downpayment requirement for those who qualify with FICO scores–the 3.5% minimum down payment is a great advantage over certain conventional loans with higher down payment requirements.
Construction loans may require a higher FICO score, but borrowers with lower scores can still qualify for an FHA mortgage to purchase an existing home. FHA loan rule minimum FICO score requirements are 580 or better for the lowest down payment, and FICO scores between 500 and 579 may still qualify under FHA loan rules but at a down payment of 10%.
Remember that lender standards also apply, and it’s best to plan on shopping around for a participating lender who can work with your scores and your needs.
When looking for an existing construction property, you can choose from an FHA Condo Loan, an FHA Mobile Home Loan, and similar mortgages to purchase a wide range of property types including manufactured homes, modular housing, and mixed-use properties which are primarily residential in nature.
Newcomers to the FHA loan program should know that FHA mortgages are intended for owner-occupiers and are not approved for investment properties the owner doesn’t intend to live in as the primary residence.
The key to all this is to plan your mortgage properly–talk to a participating lender about your FHA home loan options to learn what the future could hold for you. Your dream home awaits.
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. This type of loan allows for you to finance the purchase of the land along with the construction of the home. You can also use land that you own free and clear or has an existing mortgage.
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 to one licensed construction lender in your area, please send responses to the questions below. All information is treated confidentially.
OneTimeClose.com 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). You CANNOT act as your own general contractor (Builder) / not available in all States.
In addition, this is a partial list of the following homes/building styles that are not allowed under these programs: Kit Homes, Barndominiums, Log Cabin or Bamboo Homes, Shipping Container Homes, Dome Homes, Bermed Earth-Sheltered Homes, Stilt Homes, Solar (only) or Wind Powered (only) Homes, Tiny Homes, Carriage Houses, Accessory Dwelling Units and A-Framed Homes.
Your email to info@onetimeclose.com authorizes Onetimeclose.com to share your personal information with a mortgage construction lender licensed in your area to contact you.
- 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 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.
- Are you or your spouse (Co-borrower) eligible veterans? If either of you are eligible veteran’s, 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 $1,000,000 and review higher loan amounts on a case by case basis. If not an eligible veteran, the FHA down payment is 3.5% up to the maximum FHA lending limit for your county.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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