Build Or Buy?
November 2, 2024
The other FHA construction loan option, the one-time close mortgage, comes in here. This option is for those who want to approve floor plans, have a say in the types of materials used to build the home and choose its features.
Both loan types require the same low down payment of 3.5% and, depending on your downpayment, loan term, and other variables, require mortgage insurance for either 11 years or the lifetime of the mortgage.
Is A One-Time Close Construction Loan Right For You?
An FHA construction loan, often called a "one-time close" loan, combines construction financing and a permanent mortgage into a single transaction, approval, and loan closing day.
The borrower must choose contractors, approve floor plans, and work with the lender and builders to complete the project.
You should have plans for a temporary living space during the construction phase if needed. In typical cases, you won’t be able to live in your new home until the work is fully completed.
This loan suits anyone looking to build a custom home tailored to their needs and preferences. However, to qualify, you may need more cash reserves, higher FICO scores, and the ability to save up your own downpayment.
Is An FHA Purchase Loan Right For You?
An FHA purchase loan is a mortgage insured by the Federal Housing Administration (FHA). It is designed to help applicants with lower FICO scores and/or those who need a smaller down payment find affordable homes.
Creditwise, many feel FHA loans are more lenient compared to conventional loans. FHA loans allow the maximum financing for applicants with FICO scores of 580 or above, though your lender may have additional standards to meet.
Who is right for an FHA purchase loan? With its escape clause guarantee that you can’t be forced to buy a home that appraises lower than the asking price, those who need an affordable home who need a house, condo, mobile home, or even a fixer-upper should look into an FHA purchase loan.
If you need downpayment assistance, an FHA purchase loan may be the best option.
FHA Loan Articles
May 29, 2025An FHA cash-out refinance allows homeowners to borrow against their home equity. It replaces their current mortgage with a new, larger one; the borrower then receives the difference between the two loan amounts in cash. But these refinances have unique requirements borrowers need to consider on their way to filling out the application. Learn more about FHA cash out refi loans with our list of frequently asked questions.
May 21, 2025Buying a home is a major financial milestone. Paying off a mortgage in full is another one. Some borrowers are content to make the exact payment required and ride their mortgage out for the full term or until they refinance it. Others want to pay more and pay off their mortgage as early as possible. Several strategies can speed up the process for those who find the benefits of early payoff more attractive.
May 20, 2025If you are buying a home with an FHA mortgage, you’ll want to learn how the Federal Housing Administration (FHA) addresses termite and other wood-destroying pest issues that might be associated with the new property. How much do you know about termites and other wood-destroying pests? You could save time and money by knowing key details ahead of time.
May 19, 2025When you get ready to commit to buying your dream home, the FHA appraisal is necessary to make certain the house you want is suitable for the loan and to know its actual fair market value. Is it in good repair? Does it have termites or other pests? Is it near a high-noise environment like an airport or bus terminal? There are many issues to consider, and the FHA appraisal process is designed to address them, as we'll explore.
May 14, 2025When you buy a home with an FHA mortgage, you must pay for both mortgage insurance and insurance to protect your property while paying on the loan. There are important nuances to these insurance policies to know before you start. What's the difference between insurance against water damage and flood insurance? That's just one example of the "hidden" expenses of buying your new home to budget for.
