Articles in Category: FHA One-Time Close

April 27, 2018

One-Time Close Construction Loans For First Time Home Buyers

Are construction loans available for first-time home buyers? Some may feel daunted at the idea of having a house built for them from the ground up, but the reality is that some house hunters would rather have a home built just for them rather than buying one with a previous owner. What options are available to first time home buyers who want a construction loan? The first thing to remember is that being a first time buyer does not count against you when looking into your construction loan options. What you should be more concerned with is the nature of the loan itself. Some construction loans feature two applications and two closing dates, but One-Time Close construction loans / Single-Close construction loans offered by the VA, USDA, and FHA allow | more...

April 27, 2018

The One-Time Close Construction Loan: VA, FHA, And USDA Options

By Bruce Reichstein

There are two general types of construction loan. One construction loan has two applications and two closing dates, requiring a new credit check for each phase of the loan-the construction itself and the mortgage. Another type, the One-Time Close / Single-Close construction loan, has only one application and closing date, protecting the borrower from potential complications associated with a second loan application. There is an FHA One-Time Close loan, but also a VA OTC version of the program and a USDA OTC option available for those in qualifying rural areas. What do these loans have in common with each other? FHA One-Time Close / Single-Close Construction Loans Versus VA One-Time Close Loans The FHA and VA One-Time Close / Single-Close loan programs are quite similar. Both require builders on a | more...

April 25, 2018

FHA Home Loan Closing Costs You Should Anticipate

By Joe Wallace

FHA home loans have closing costs a borrower should plan to save and pay for. No matter if you need an FHA Home Equity Conversion Mortgage, a 203(k) rehab loan, or an FHA One Time Close construction loan, there will be closing costs to pay for. No borrower should plan for a home loan without anticipating the closing costs. You should budget and save for these expenses as early as possible-once you know you are interested in purchasing a home, you should prepare for these costs. HUD 4000.1 tells the lender that FHA loan rules permit closing costs; the lender “may charge and collect from Borrowers those customary and reasonable closing costs necessary to close the Mortgage. Charges may not exceed the actual costs.” This is not a complete or | more...

April 12, 2018

FHA One-Time Close Construction Loans: An Option You Should Consider

By Bruce Reichstein

The FHA One-Time Close / Single-Close construction loan is an option you should consider if you are interested in having a home built for you rather than purchasing an already-lived-in property. Construction loans are different than existing construction loans, and the FHA One-Time Close (OTC) / Single-Close construction loan offers a single application, a single closing date, and more peace of mind for the borrower once the loan has been approved. FHA One-Time Close / Single-Close Mortgages And FICO Score Requirements You will have higher credit requirements with an FHA One-Time Close loan due to the higher risk for the lender. Your application may require a FICO score of 620 or higher at the minimum, depending on the lender. Here’s a sample breakdown of FICO score requirements from one hypothetical | more...

March 21, 2018

FHA Home Loans For Houses, Condos, And Townhouses Part One

By Bruce Reichstein

What should you know about FHA home loans for houses, condos, and townhouses? There are plenty of issues to keep in mind including down payment requirements, appraisal rules, and special options. FHA Loan Rules For Houses The FHA loan handbook, HUD 4000.1, addresses home loans for new houses depending on their classification as existing construction, new construction, or proposed/under construction. Borrowers who want to buy an existing construction home will be looking at property that has had at least one owner. Existing construction FHA loans require an appraisal and the borrower is required to make a minimum down payment of 3.5% of the adjusted value of the property unless the transaction requires more due to credit issues, identity-of-interest problems, etc. New construction loans (such as the FHA One Time Close | more...

February 7, 2018

What Are The Differences Between OTC FHA Construction Loans And Other FHA Home Loans?

By Bruce Reichstein

What are the basic differences between FHA One-Time Close / Single Close construction loans and other types of FHA mortgages? Borrowers should understand the basic differences and how they will affect your transaction.FHA One-Time Construction Loans / Single-Close Construction Loans Have Different Appraisal Requirements When an FHA loan applicant wants to purchase a home that is considered “existing construction”, which has been built for at least a year or more with at least one owner, the appraisal process happens as a condition of loan approval to insure the property meets minimum FHA standards. When you apply for an FHA One-Time Close construction loan, also known as an FHA construction-to-permanent loan, an inspection is required to insure the property meets minimum standards. HUD 4000.1 explains what the inspection requirements are for | more...

FHA One Time Close Construction Loan Option

February 1, 2018

FHA One-Time Close Construction Loan Rules For Maximum Mortgage, Down Payment

By Bruce Reichstein

FHA One-Time Close / Single-Close Construction Loan rules for maximum mortgage amounts and down payments are found in the FHA loan handbook, HUD 4000.1. The FHA One-Time Close mortgage, also known as a construction-to-permanent loan, lets borrowers apply for a loan to have a home built for them using only a single application, loan approval, and closing date. HUD 4000.1 describes it as follows: “A Construction to Permanent Mortgage combines the features of a construction loan (a short-term interim loan for financing the cost of construction) and the traditional long- term permanent residential Mortgage with a single mortgage closing prior to the start of construction”. FHA One-Time Close / Single-Close Construction Loan Maximum Loan Amount Rules Maximum mortgage amounts for FHA One Time Close loans are determined “by using the | more...

Is U.S. Citizenship Required For An FHA One-Time Close Construction Loan?

January 29, 2018

FHA One-Time Close Construction Loans: Down Payments and Interest Rates

By Bruce Reichstein

FHA One-Time Close / Single-Close construction loans have different requirements for down payments and interest rate issues can be more complex; many borrowers are interested in this home loan but aren’t clear on the finer points. Today we examine how down payment issues and interest rate rules apply to the FHA One-Time Close construction loan. The FHA loan handbook, HUD 4000.1 describes the One-Time Close loan, also known as an FHA construction-to-permanent mortgage, as a loan that “…combines the features of a construction loan (a short-term interim loan for financing the cost of construction) and the traditional long- term permanent residential Mortgage with a single mortgage closing prior to the start of construction”. FHA One-Time Close Construction Loan Down Payment Rules HUD 4000.1 allows for some unique down payment sources | more...

January 25, 2018

FHA Loan Options For New Construction Homes: FHA One-Time Close Mortgages And More

By Bruce Reichstein

FHA loan options for buying new construction homes include the FHA One-Time Close / Single-Close Construction Mortgage, which allows a borrower to apply once and have a single closing date for a house built from the ground up. FHA One-Time Close mortgages differ from other construction loans because this type of construction loan eliminates the two-step construction loan application process where the borrower applies once for the costs of construction, and has a closing date for that loan, then applies a second time for the mortgage on the property itself. It’s definitely an advantage to have a single application and closing date. But what are the other options to compare this type of loan to? It’s good to know what you can get from multiple options-making an informed choice to | more...

December 13, 2017

FHA One-Time Close Requirements: Appraisals

By Bruce Reichstein

FHA One-Time Close / Single-Close construction loans feature a single loan application and closing date for both the construction phase of the loan and the “permanent” portion of the loan. Like other FHA mortgages, an appraisal is required on the property to be secured by the mortgage. In general, FHA loan appraisal requirements include the following guidelines on the timing, as found in HUD 4000.1, the FHA loan handbook: “The effective date of the appraisal cannot be before the FHA case number assignment date unless the Mortgagee certifies that the appraisal was ordered for conventional lending or government-guaranteed loan purposes and was performed pursuant to FHA guidelines.” While this may not normally be an issue for construction loans given the timing of the appraisal, another portion of the same section | more...