December 30, 2020
Are you interested in buying or building a home in the new year? Be informed about several issues that may apply to you when building or buying a new home. With a little information you can become better prepared to explore your FHA home loan options in 2021
5. FHA Loan Limits Are Higher in 2021
FHA loan limits go up again for the majority of housing markets in the USA again in 2021; higher loan limits may make the difference for some trying to decide where to purchase or build as well as for what kind of property to buy. Don’t forget that FHA loan limits are higher for multi-unit properties.
Those interested in building a home using an FHA One-Time Close construction mortgage should ask their lenders how higher loan limits might affect your choices when deciding on plans, materials, etc.
4. FHA Home Loans Are Not Need-Based Loans
Unlike certain USDA home loans to buy or build, FHA mortgages feature no need-based restriction on FHA loans such as household income caps or other restrictions. FHA mortgages are for any financially qualified borrower and are not intended for a certain segment of the population, a certain income range, and FHA loans are not for first-time buyers only.
3. FHA Mortgages For Condo Units, Mobile Homes, And Multi-Unit Properties
Yes, you can purchase condo units, mobile homes and even multi-unit homes with an FHA mortgage with the same low downpayment terms and guidelines as for existing construction suburban homes.
When it comes to purchasing a multi-unit property remember that with FHA loans you are permitted to rent out the unused living units in the home for 30 days or more but remember that FHA loan rules do not permit FHA mortgages for Air BnB operations or other short-term occupancy types.
2. FHA Loan Credit Terms
Lender standards will apply, but FHA loan program minimums start at 580 and higher FICO scores for maximum financing of 3.5% down. Borrowers who want to explore their FHA loan One-Time Close construction loan options should expect to be held to a higher credit score stanard, but these will be lender requirements and not variations in FHA loan minimums.
1. Down Payment Assistance Is Permitted
FHA home loans for purchase permit down payment assistance programs that meet FHA standards; you will quickly learn that the FHA as an agency does not offer such assistance and you will need to see a local agency, but down payment help can be a major boost for some borrowers.
Keep in mind that for One-Time Close loans, you may find your lender does not permit down payment assistance, but this is NOT an FHA guideline but a lender rule.
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.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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