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
October 30, 2024Just because an FHA loan is designed to be more lenient with FICO scores and require a lower down payment doesn’t mean the house you buy with that loan is less than ideal. Did you know that FHA loans have minimum property standards to ensure the home is safe and livable? Those standards require the home to have an “economic life” for the entire term of the loan so you can freely sell the property later on if you choose to do so.
October 29, 2024Buying a home with an FHA mortgage is a major life decision, and preparation is essential before you start house hunting or consider making an offer on a property.
How to get started? In the early stages, establishing your budget and how much work you need to do on your credit is key. But once you have gotten past the initial phase of that planning you’ll want to consider the house itself and what you want from it.
October 25, 2024Mixed-use properties combine residential and commercial spaces. Some borrowers applying for FHA home loans want to know if purchasing such a property using an FHA single-family home loan is possible. The FHA does allow the use of its loans for mixed-use properties, but certain conditions must be met.
October 24, 2024Buying your first home is a major milestone. If you use an FHA mortgage to buy your home, you’ll have two types of insurance to consider. One type is the FHA-required mortgage insurance premium, which is paid for 11 years or the loan's lifetime, depending on your down payment, loan term, and other variables.
October 22, 2024While the Federal Housing Administration sets rules for FHA loans, lenders retain some flexibility in determining interest rates, fees, and specific loan terms. Depending on circumstances, the FHA loan offered by your local bank might not be as competitive as one offered by a credit union or an online lender specializing in FHA products, or vice versa.
