If you want to build your dream home but you're having a hard time meeting the requirements of a conventional loan, we've got good news for you. An FHA Construction loan provides you with more flexible lending requirements, giving moderate-income families the opportunity at custom-homeownership.
Let's find out how an FHA Construction loan can help you buy land and build your house the way you envision it.
Also known as a "3 in 1 mortgage," an FHA Construction-to-Permanent loan finances the whole home construction process with one loan product. It covers all expenses concerning home construction and provides the permanent mortgage for the newly built home.
An FHA Construction loan takes care of all the costs involved with construction, including the land, permits, plans, fees, labor, and materials. This is excellent news for FHA borrowers who may not have extra funds to buy land or apply for a second loan.
Once the home is complete, the construction loan will roll into a traditional mortgage.
When looking for the land purchase, make sure that it doesn't require a teardown or building of multiple properties. It should be vacant land, essentially ready to build a home from the ground up.
Before starting building, you need to get pre-qualified for your construction loan to know your borrowing limits. This will help you create a budget for the entire project.
The builder you select must be willing to work with the FHA Construction Loan program. Aim to work with a builder who already has experience with FHA construction loans as well as one that has an excellent track record.
Once you've chosen your land and builder, you can now close your loan application so that construction can begin.
An FHA Construction Loan makes financing your custom home more accessible. To get started, all you need to do is find a licensed builder in your area and work with us for all your FHA financing needs. Ask one of our trusted mortgage advisors for more details.
Jeff Lazerson - Mortgage Columnist since 2011