The FHA new construction loan allows builders and retailers to not have to worry about borrowers requiring a significant down payment or unfavorable variable rate construction loans.
The land can be purchased, gifted (FHA gift guidelines apply), owned, or land equity can be used for the down payment. Unique types include: log homes, kit homes, metal homes, bamboo homes, storage container homes, tiny homes, and other types of non-traditional construction types. Ineligible construction types: multi-units, single-wide manufactured homes, condominiums, attached housing or semi-attached, and unique construction types. FHA financing is available for borrowers under 620 credit score.Įligible and Ineligible New Construction FHA Loan TypesĮligible construction types: new site/stick built, new manufactured construction, and new modular construction.This FHA program requires a minimum credit score of 620.You may be eligible for regular FHA financing with a manual underwrite.Borrowers must go through the pre-approval process and a Loan Originator must get an Automated Underwriting System (AUS) approval.Have to occupy the property as your primary residence – owner-occupied only.The maximum loan amount goes up to FHA county mortgage limits.The minimum down payment is 3.5% for the FHA new construction loan.No re-qualification is required after the construction is complete.You do not have to make payment during the construction.You will work with a team that is knowledgeable and comfortable with the process, which allows for a streamline process.
The FHA new construction loan does not require re-qualification or a second appraisal due to the nature of the construction, lot purchase, and permanent mortgage being all one loan.įor the FHA new construction loan, the construction, lot purchase, and permanent financing are funded with one closing. Since most new construction loans are short term, borrowers incur additional closing costs and have to re-qualify for the permanent loan. When it comes to most types of new construction financing with lenders, they require a bridge loan that incurs additional cost.
Advantages of the FHA New Construction Loan This FHA new construction loan is for financing the construction, lot, and permanent mortgage with one single loan. Looking for FHA new construction loan requirements? A lot of lenders require a bridge loan for new construction, which calls for re-qualification and a second appraisal after the construction is complete. FHA New Construction Loan Requirements | Guidelines & Property Types
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