FHA Construction to Permanent 

Apply for an FHA construction to permanent loan.



FHA construction to permanentDo you want one loan to buy the land, build a new home with a construction loan and then have the loan convert to a permanent loan? 


A FHA construction to permanent mortgage combines a construction loan (short-term loan for financing the cost of construction) and the traditional long-term permanent residential mortgage with a single mortgage closing prior to the start of construction.

The borrower must be purchasing the land at the closing of the construction loan, or have owned the land for six months or less at the date of application.  At closing, after funds are disbursed to cover the purchase of the land, the balance of the mortgage proceeds must be placed in an escrow account to be disbursed as construction progresses.

FHA has taken the following steps:

  • Update the combination of credit scores and cash out for new borrowers
  • New borrowers will now be required to have a minimum credit score of 620 to qualify for FHA construction to permanet loan.
  • FHA one time close construction loan requires a minimum credit score of 620

FHA requires new borrowers to have a minimum credit score of 620 to qualify for 3.5% down payment for an FHA construction to permanent loan.

FHA construction loan allows you to roll the costs of buying the land and building a home into one FHA mortgage loan. The construction part of the loan covers expenses including the purchase of the lot, building materials, permitting fees and the construction work. 

Once the construction is completed the loan automatically converts into a 30 year fixed rate mortgage. Hence the nick name One Time Close because you only close one time.


Applying for an FHA construction loan

FHA construction loans call for the same qualications as a traditional FHA mortgage loan, but with a few added requirements. To qualify for an FHA loan you must:

  • Minimum down payment 3.50%
  • Minimum down payment of 3.5%
  • Minimum credit score of 620 or higher
  • FHA maximum debt to income ratio can be over 55%
  • Manual underwriting maximum debt to income ratio is 40/50%
  • Make sure your loan amount does not exceed ‎‎FHA loan limits.

With the FHA construction to permanent mortgage the borrowers can secure a mortgage for the purchase of the land, With the FHA construction to permanent mortgage the borrowers can secure a mortgage for the purchase of the land, the construction and the home’s permanent mortgage in a single closing. Only one closing means only one set of closing costs, helping you save money.


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www.MORTGAGE-WORLD.com LLC is an online mortgage company specializing in FHA loans for first time home buyers.



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