Articles Tagged With: FHA One-Time Close Construction Loan

January 17, 2024

FHA Home Loan Options In 2024: Build, Buy, Or Wait?

2024 may be the year more people think about owning a home thanks to anticipated lower mortgage rates and more homes for sale. Which option is best for you when finding a new place to live? There’s no one-size-fits-all answer, but some options are more tempting than others. Renting Options If You Aren’t Ready Yet Renting in 2024 may be an option to consider IF you are not quite ready to commit to a home. Borrowers sometimes underestimate how long it takes to get fully ready for a mortgage and if you are just now exploring your credit, lender options, and saving up for the down payment. However, some market watchers believe rental inventory may be lower this year, and there could be more competition for rental properties overall. Are | more...

July 3, 2023

Can An Eligible Veteran Build on Their Own Lot or Buy Land with a VA loan?

By Bruce Reichstein

If you are interested in purchasing a piece of land and financing it through a VA-approved lender, there are several loan options available for you. While a standalone VA land loan is not offered, the VA loan program does allow for the purchase of land when combined with the construction costs to build a new home. This loan product is known as a VA One-Time Close construction to permanent loan. It is a convenient loan option that includes the cost of the land plus the cost of the construction and even allows any VA funding fee to be financed into the loan. This Zero out-of-pocket financing allows eligible Veterans to have a true $0 down loan. To utilize the VA loan for buying land and constructing a new home, | more...

May 23, 2023

FHA Loans: Existing Construction, New Construction

By Joe Wallace

Which type of property should you buy? A brand-new home, a house that has been on the market for some time, or a house you propose to build from the ground up using an FHA One-Time Close construction loan? This is a question raised by a Yahoo! Finance article from May 20, 2023. That article observed that in the current mortgage market, some borrowers may be getting good deals by purchasing recently built homes; homes that have never been owner by another person. “While the average mortgage rate remains stuck above 6%, buyers of new homes are getting a much better deal,with borrowers buying homes far below the mortgage rate reported at the time this article was written; 6.5%. According to that article published by Yahoo! Finance, house hunters looking | more...

Build on your own lot. Construction loan basics

May 3, 2023

Build A House On Your Own Land With An FHA Mortgage

By Bruce Reichstein

Some house hunters decide to stop looking at existing construction homes and start thinking about building a house for themselves from the ground up. Other people know from the start of their homeownership journey that they want to build and not buy an existing home. FHA home loan rules in HUD 4000.1 include guidelines for lenders who want to help these borrowers. The section of the rulebook titled “Building on Own Land” tells lenders how to proceed with a construction loan including maximum loan amounts, who can act as the general contractor on the project, and more. Are you interested in having a house built for you on your own lot? Not interested in having to choose from existing construction housing? Building on your own land may be the right | more...

March 31, 2023

Make The Most Of Your FHA Home Loan

By Bruce Reichstein

Your home loan choices aren’t limited to the type of home loan available. The marketplace offers FHA, conventional, USDA, VA, and other options. But some of the choices in the FHA home loan program may change how you think about buying a home. Should you build instead of buy? Should you consider a fixer-upper? Or would you rather buy an existing house you can move into right away? FHA Loan Program Options It’s not a simple matter of deciding between whether to have a home constructed on your own lot by applying for an FHA One-Time Close construction loan or choosing the FHA 203(b) loan to purchase an existing-construction home. Borrowers also have the option to choose a fixer-upper home and apply for an FHA 203(k) Rehabilitation loan to pay | more...

Construction Loan Advice For New Borrowers

March 27, 2023

Are You Ready For A Construction Loan in 2023?

By Bruce Reichstein

You can use a One-Time Close construction loan to build a new home on your own land or land you buy in conjunction with the loan. This is a good option to think about if you want a house with designs you’ve approved instead of buying someone else’s house. Getting Your Loan Started Finding a participating FHA or VA lender, depending on the loan you choose is an integral part of the construction loan process. You should also know that construction loan mortgages require higher FICO scores and more time before move-in than a typical home purchase loan. But the end results are worth it. But just as important? Finding the right builder. One-Time Close loans don’t allow the borrower, builder, relatives of the buyer, etc . to act as | more...

February 26, 2023

Can I Do My Own Contracting Work With An FHA One-Time Close Construction Loan?

By Bruce Reichstein

When applying for an FHA One-Time Close / Single-Close construction loan to have a house built from the ground up, some borrowers want to know if the FHA construction loan program will permit the borrower to act as her own contractor. FHA loan rules found in HUD 4000.1 would seem to make this question fairly easy to answer, but look beyond this quote from the FHA home loan rulebook-this isn’t the only rule that governs the FHA construction loan process: “The Borrower must have contracted with a builder to construct the improvements. The builder must be a licensed general contractor. While the FHA guidelines state “The Borrower may act as the general contractor, only if the Borrower is also a licensed general contractor,” the FHA lender can choose not to | more...

Home Loans For Building On Your Own Land

February 12, 2023

One-Time Close Construction Hints

By Joe Wallace

One-Time Close (OTC) loans allow borrowers to build a house on their own lot instead of having to choose from existing properties. You can be a first-time home buyer and still be approved for a One-Time Close construction loan, also known as Single-Close loans or Single-Close construction mortgages. If you have never examined your options on the real estate market, it’s easy to assume you aren’t financially qualified for a construction loan. After all, that sounds like a very big undertaking, doesn’t it? Having a house built for you? That may sound like something that other people might qualify for, but the fact is that FHA and VA OTC loans have the same requirements as any other FHA or VA mortgage. These loans are designed to be more affordable, and that | more...

January 29, 2023

FHA Loans: New Construction Vs. Existing Construction?

By Joe Wallace

What is the difference between new construction and existing construction? For the purpose of an FHA home loan, the distinction can be important, even if it’s just on a procedural level. The FHA loan handbook (HUD 4000.1) makes important distinctions between new construction and existing construction loans. FHA Home Loans For Existing Construction Properties The FHA defines existing construction properties in a very specific way: “Existing Construction refers to a Property that has been 100 percent complete for over one year or has been completed for less than one year and was previously occupied.” The appraisal requirements for existing construction are not quite the same (in terms of timing, paperwork and required forms) but the issue that will most affect a typical borrower is in how the appraisal is to | more...

The FHA Loan That Helps You Build On Your Own Lot

January 13, 2023

FHA One-Time Close Construction Loan Limits Are Higher In 2023

By Bruce Reichstein

If you want to build a home from the ground up using an FHA One-Time Close Construction Loan, there’s good news for you in 2023. Your buying power has increased thanks to FHA loan limits published at the start of the new year. The Department of Housing and Urban Development issues updated FHA loan limits on an annual basis. The limits vary depending on whether the housing market in a given zip code is considered typical, high-cost, or low-cost. In 2023, the limits for all FHA forward mortgages (including FHA One-Time Close Construction Loans) increased in many areas across the USA. FHA loan limit calculations include a nationwide forward mortgage limit ‘floor’ and ‘ceiling’ for a one-unit property. If you want an FHA One-Time Close Construction Loan in 2023, the | more...