The FHA One-Time Close Construction-to-Permanent Loan is a secure, government-backed mortgage program available for one-unit stick-built primary residences, new manufactured housing for primary residences (no singlewides), and modular homes. It allows borrowers to finance for the construction, lot purchase (if necessary) and permanent loan into one loan and a single closing all at once.

Having a new home built from scratch used to mean securing a short-term construction loan and then refinancing with a conventional loan once the house was built. With the FHA’s Construction-to-Perm Loan, the borrower closes one time. This single closing reduces loan costs and insures that no re-qualification by the borrower is needed once construction is complete. The loan converts to a permanent mortgage as soon as construction is complete and the new home is built. No payments are due from the borrower during construction. The equity in any previously owned land can be used as the down payment.

This type of loan gives homebuyers peace of mind, because they avoid having to go through a second loan closing, and don’t have to worry about unforeseen changes since the interest rate is locked in before construction begins.

The FHA One-Time Close Construction Loan features all other perks of FHA- insured loans: easy credit qualifying for scores as low as 620 that allows for a minimum requirement of 3.5 percent down payment, more flexible guidelines for homebuyers’ work histories, small escrow reserve requirements, and debt-to-income ratios up to 50 percent.

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