[vc_row][vc_column][vc_column_text]FHA loan programs are a popular option for home buyers. These loans are supported by the Federal Housing Administration with the goal of making mortgages available to buyers who might not have excellent credit or sufficient funds for a sizable down payment. Can a house be built using an FHA loan, though? [vc_empty_space height=”14px”][vc_column_text]But what if you want to build a home?
Can You Build a House with an FHA Loan?
You have two primary options for financing a new build with an FHA loan, so the answer is yes:
1. Obtain a conventional FHA loan from the builder to buy an existing newly constructed home. The buyers who prefer a shorter timeline and the ease of purchasing a pre-designed home should choose this option. In addition to avoiding many of the potential pitfalls of starting from scratch, borrowing money is also much simpler. At OVM Financial, we’re experts in this type of funding. When you’re ready to buy, we can put you in touch with reputable builders in your neighborhood and handle your FHA loan. [/vc_column_text][vc_empty_space height=”14px”][vc_column_text]2. Use an FHA construction-to-permanent loan. You can buy the land, pay for the building work, and take out a long-term mortgage on the finished property all at once with this kind of loan. The best candidates for this option are those who want to actively participate in the construction process, usually by completely designing the house themselves. Although OVM does not provide this kind of financing, we would be happy to put you in touch with a lender who does. [/vc_column_text][vc_empty_space height=”14px”][vc_column_text].
What are the Requirements for Building a House with an FHA Loan?
Obtaining an FHA construction-to-permanent loan is more difficult than obtaining a standard FHA loan. [vc_empty_space height=”14px”] When construction is involved, there are many moving parts, so lenders require additional assurance that you will be able to repay the loan. [/vc_column_text][vc_empty_space height=”14px”][vc_column_text].
Here are the most common requirements for an FHA construction-to-permanent loan:
What is the Process for Building with an FHA Loan?
The procedure is simple, uncomplicated, and comparatively quick when using a traditional FHA loan to purchase an existing new construction home.
[vc_empty_space height=”14px”][vc_column_text]Although the procedure for an FHA construction-to-permanent loan can vary depending on the lender and the borrower’s specific circumstances, you typically follow these steps when building with an FHA loan:
Where to Get Help with FHA Mortgages
At OVM Financial, we are aware of how perplexing the mortgage process can be. We also recognize that you probably have concerns about your particular situation and require guidance in navigating your available home loan options. Call us at 757-296-2148 to ask any questions you may have about FHA loans. Additionally, you can begin your loan application online when you’re prepared to apply for a mortgage.
Can FHA be used to build a house?
An FHA construction loan is a type of mortgage that enables you to include the costs of completely building a house. The construction-to-permanent loan and the FHA 203(k) loan are the two different kinds of FHA construction loans.
What would disqualify a house from an FHA loan?
To keep its occupants safe, the building’s general construction must be in good condition. This means that the property may fail an inspection due to serious structural damage, leaks, dampness, decay, or termite damage. In this situation, repairs are necessary before the FHA loan can be approved.
How long do you have to live in a building after an FHA loan?
Within 60 days of closing, you must move into the property and stay there for at least a year. If you decide to disregard these requirements, there are severe penalties. Nevertheless, there are still ways to rent out the property: FHA permits you to do so after a year of residence.
What will an FHA loan not approve?
Your lender might not be able to approve the loan if a home is too close to a high-pressure gas pipeline, high voltage electrical wires, mining or drilling operations, or other dangers.