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
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FHA Loan Articles and Mortgage News
July 20, 2024 - When you close an FHA mortgage, you make your down payment and pay closing costs, accept the keys to the home, and prepare to move in. But what should you expect after moving into the new house?
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July 17, 2024 - What fees and expenses can you expect from an FHA reverse mortgage, also known as an FHA home equity conversion mortgage (HECM)? There are a number of important costs to save for. We examine them in this article.
July 16, 2024 - There are many options to consider when planning your home loan. One good example? Some borrowers wonder if they should choose a 15-year FHA loan over a 30-year mortgage. Those who want to save as much money might consider the 15-year FHA loan, but there are other choices.
July 13, 2024 - According to HUD, the changes announced in early July 2024 modernize the program and enhance its usefulness for individuals and families seeking affordable financing for renovating or rehabilitating a single-family home when purchasing or refinancing it.
