FHA New Construction Loan Requirements | Guidelines & Property Types

FHA New Construction Loan Requirements Guidelines & Property Types

FHA New Construction Loan Requirements | Guidelines & Property Types

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.  This FHA new construction loan is for financing the construction, lot, and permanent mortgage with one single loan.

Advantages of the FHA New Construction Loan

When it comes to most types of new construction financing with lenders, they require a bridge loan that incurs additional cost.  Since most new construction loans are short term, borrowers incur additional closing costs and have to re-qualify for the permanent loan. 

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.

For the FHA new construction loan, the construction, lot purchase, and permanent financing are funded with one closing.  You will work with a team that is knowledgeable and comfortable with the process, which allows for a streamline process. 

Key Factors

FHA New Construction Guidelines

Eligible and Ineligible New Construction FHA Loan Types

Eligible construction types: new site/stick built, new manufactured construction, and new modular construction.

Ineligible construction types: multi-units, single-wide manufactured homes, condominiums, attached housing or semi-attached, and unique construction types.

Unique types include: log homes, kit homes, metal homes, bamboo homes, storage container homes, tiny homes, and other types of non-traditional construction types.

The land can be purchased, gifted (FHA gift guidelines apply), owned, or land equity can be used for the down payment.

Other Types of New Construction Loans

Advantages for Builders and Retailers

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.  Since the loan closes all at once, a borrower does not have to re-qualify, which eliminates the chances of a credit situation changing.

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