Can You Get an FHA Loan to Build a House?
FHA Construction Loans: What You Need to Know
If you can’t find your dream home on the market, you might just want to build it yourself! But traditional construction loans can often be complex and expensive-- so what if you could turn to the trusty FHA to get a home construction loan that won’t completely empty your bank account? Well, it turns out you can.
FHA Construction Loans Can Help Borrowers Save With a Single Closing
One of the biggest benefits of FHA construction loans is the fact that, unlike typical construction loans, you’ll only have to close once-- and that can save you some serious dough. With other kinds of construction financing, you’d likely have to secure a short-term loan for construction, and later repay that loan by taking out a mortgage. Having to endure two closings, a variety of administrative hassles, and (sometimes) confusing fees can make that double closing seriously headache inducing.
How FHA Construction-to-Permanent Mortgages Work
If you want to build your own home, you may either be considering purchasing a piece of land, or you might have bought the land already. If you’ve already purchased the land, it may be able to count toward your down payment, and if you haven’t, you’ll usually need to finalize your land purchase before closing on your FHA construction loan begins. Once the loan itself is finalized, the funds for construction are placed into an escrow account and are doled out in a piecemeal fashion as various construction goals are completed.
FHA Construction Loans are Also Available for Home Rehab
If you don’t want to buy a completely new home, but simply want to refurbish or renovate a home to make it perfect, the FHA might also be able to help you with their 203(k) mortgage program. There are two main types of 203(k) loans; a smaller version that can provide loans up to $35,000, which will typically be used on a home that you already own, and a larger version that can be used to purchase a home that needs renovations, or, alternatively, to do major renovations on your current home. Just like other FHA loans, the maximum loan amount that can be taken out with a 203(k) mortgage is constrained by the nationwide FHA loan limits.
If you’d like to learn more about FHA loan options, simply fill out the form below and a friendly home.loans specialist will get in touch.