Learn About FHA Loans and How You Can Qualify
How can I get an FHA construction loan?
Last modified: November 17, 2022
Borrowers interested in FHA mortgages for new construction will find that they're possible to get with a little bit of extra effort. Not all FHA lenders will offer construction loans, but you can find the right lender by shopping around.
Traditional Construction Loan
This loan plan consists of a short-term loan that covers the construction period, and then the usual long-term mortgage loan which covers the cost of the home itself. It can be a risky approach if the borrower's credit position changes between the two loans.
One-Time Close Loan
One-time close loans have a single transaction for the entire process. This eliminates the borrower’s need to qualify for two different loans and removes the risk associated with the traditional construction loan. One-time close loans may feature different credit requirements and additional lender standards, such as the need for higher credit scores and increased scrutiny of employment and credit history.