Builder Benefits for FHA One-Time Close Loans
FHA Construction Loans for Building Homes
The FHA Construction-to-Permanent program is an avenue that many builders should explore when looking for additional business. By partnering with pre-approved homebuyers, contractors can take advantage of a smooth, start-to-finish process that allows consumers to purchase and build a home according to their liking, all in a single mortgage.
Builder Benefits
When building a home, most conventional mortgages require the borrower to qualify twice—once for the construction loan and again for the purchase. The FHA One-Time Close Loan, on the other hand, skips the tedious requalification process, which involves a second credit check and presentation of documents. Not only is this a cost and time saving step, but it also protects builders involved in the loan against unforeseen circumstances, such as buyers losing their jobs or taking a hit to their credit scores.
Sellers and builders can make contributions of up to 6 percent toward the homebuyer’s closing costs and prepaid items. Any contribution funds beyond that are reduced, dollar-for-dollar, from the loan amount. The high, 6-percent threshold allows buyers to receive the same financing without having to forfeit contributions.
Borrowers can take advantage of FHA’s lenient underwriting criteria, such as lower debt-to-income ratios compared to other conventional loan types. These perks make the FHA One-Time Close Loan appealing to many potential homebuyers, making it an opportunity for builders to gain contracts.
When financing with a Construction-to-Permanent loan, funds are drawn in phases, up to 5 times. A draw schedule is created by the lender, which the buyer and builder agree to. This ensures that all contractors are paid on time, as the project progresses.
Among the many advantages that come with an FHA loan, builders and buyers understand that the low down payment requirement is 3.5 percent. Additionally, the entire amount can be covered in gift funds which attracts more consumers.
There is a growing number of individuals that have an immediate need for small- to mid-size homes built from scratch. FHA.com works with licensed FHA lenders who specialize in the One-Time Close Loan process to pre-approve potential homebuyers looking for builders to do the job. Builders have an opportunity to be first in line to be paired up with these individuals and take on projects that would otherwise fly under the radar.
For Builders interested in receiving the FHA One-Time Close Builder registration approval form, please send your request to [email protected].
One-Time Close Construction Loans
SEE YOUR CREDIT SCORES From All 3 Bureaus
Do you know what's on your credit report?
Learn what your score means.
FHA Loan Articles and Mortgage News
September 7, 2024 - Buying residential real estate can be overwhelming, and filled with uncertainties and stress. You can make this process easier by taking the time to understand the strategies and tactics involved that can raise your chances of a successful purchase.
September 6, 2024 - FHA One-Time Close Construction loans and FHA 203(k) Rehabilitation mortgages are quite different from existing construction mortgages. Buying an existing home means dealing with the potential challenges of that property, bu require extensive work on the house isn't always needed.
September 5, 2024 - When you apply for an FHA mortgage, lenders evaluate your credit reports and scores to decide on approving your loan application. An applicant's credit history paints a picture for the lender who needs to know your level of financial responsibility.
September 4, 2024 - FHA home loan options include manufactured homes and condo units, surprising some borrowers who assume FHA mortgages are only for traditional suburban houses. You can buy a condo unit with an FHA loan, but these transactions are a bit different.
September 2, 2024 - With their more forgiving credit requirements and lower down payment options, FHA loans provide a potentially more affordable pathway to homeownership. However, not everyone needs the smaller down payment option. Some can benefit from putting more upfront.
