FHA and VA loans are very popular options for home buyers who want to buy a home with a low down payment. FHA loans require only a 3.5% down payment, while VA loans require no down payment at all. These loans open the door for more people to take that first step into home ownership, even if they don’t have a large reserve of cash available to them.
However, these loans are rarely used for new construction. This is because most lenders require a borrower to get separate loans for items like a lot purchase, construction, and a permanent mortgage when the home is completed. So, for example, a veteran building a new home would complete only the permanent mortgage through the VA loan program. The veteran would still have to make a down-payment, which can run as high as 15 – 30% on a new construction loan, and pay closing costs on the initial loans. Obviously, this makes building a new home less attractive to buyers who know a VA loan or FHA loan will be their best option. Unfortunately, many people stop researching there and don’t realize that there are options out there to help them achieve their real estate goals, without breaking the bank.
One Time Close VA and FHA Loans
A one-time close loan rolls everything into a single mortgage loan, with just one application process and one closing. Hurst Lending is one of a select group of lenders that are able to offer one time close loans to VA and FHA borrowers, for the purposes of building a new home. These loans can bring an otherwise unattainable dream within reach for many buyers, by dramatically lowering the out-of-pocket costs for purchasing land and building a home. FHA loans are available for borrowers with lower credit scores. In short, these loans enable more Americans to build the home of their dreams.
Benefits of a One-Time Close VA or FHA Loan
- Buyers need very little cash for a down-payment
- 100% LTV VA loans for new construction
- 96.5% LTV FHA loans for new construction
- Credit scores as low as 560 can be accepted for VA and FHA loans
- Land can be included in the mortgage
- Loan is fully approved and appraised prior to construction taking place, eliminating the risks of over-building or becoming un-qualified during the construction process
- Efficient one-time close, no need for a separate construction loan and a permanent mortgage
- Fees and construction phase interest can be rolled into the loan
The only requirement following construction is an inspection to ensure the home was built to specifications of the contract. New construction can seem unattainable to many, but it doesn’t have to be that way. Of course, just because you qualify for a loan doesn’t mean it’s the right decision for your financial reality. Hurst Lending will work with you to find a loan that fits your needs, and your budget. Learn more by reaching out today!