FHA One-Time Construction Loans

The FHA one-time close construction loan applies the familiar FHA framework to a home that does not exist yet. The Federal Housing Administration insures the loan, the lender funds the build in draws, and at completion the same loan converts to a permanent FHA mortgage. Because it is one loan rather than two, you qualify once and close once, which removes the risk of being approved for construction and then finding the permanent financing has moved out of reach by the time the house is finished.

The appeal is the same as FHA generally: a low minimum down payment for buyers who meet the credit threshold, and credit guidelines that are more forgiving than conventional standards. Applied to a build, that can make new construction reachable for buyers who assumed it required a large cash position. The home must be a primary residence. FHA construction financing is not intended for a second home or an investment property.

Two things deserve attention before you commit. FHA charges an upfront mortgage insurance premium plus an annual premium collected monthly, and on most FHA loans that annual premium stays for the life of the loan, so it belongs in your long-term math. And FHA construction programs hold the builder to standards as well: licensing, experience, insurance, and a contract and budget the lender can underwrite. Loop us in before the builder contract is signed so it is written in a way the program can accept.