FHA One-Time Close Construction Loan: Build Your Home with a Low Down Payment

What is an FHA One-Time Close Construction Loan?

The FHA One-Time Close (OTC) Construction Loan allows first-time homebuyers and those with lower credit scores to build a brand-new home with a low 3.5% down payment. Unlike traditional construction financing, this program bundles the construction and permanent mortgage into a single FHA loan.

That means one loan approval, one closing, and one set of fees—making it easier and more affordable to build your dream home.

Why Choose an FHA OTC Construction Loan?

✔ Low Down Payment – Only 3.5% down for eligible borrowers

✔ Easier Credit Qualification – Lower credit score requirements than conventional construction loans

✔ One-Time Closing – Avoids multiple loans and extra closing costs

✔ Fixed Interest Rate – Your interest rate is locked in before construction starts

✔ Flexible Property Options – Allows for single-family homes, modular homes, and manufactured homes

How the FHA One-Time Close Loan Works

Here’s how the FHA OTC loan simplifies the home-building process:

1️⃣ Loan Pre-Approval – Get approved based on credit, income, and FHA guidelines.

2️⃣ Find a Builder & Choose a Home Plan – Work with an FHA-approved builder and finalize your home design.

3️⃣ Loan Closing – Your FHA loan is finalized before construction begins.

4️⃣ Construction Begins (6-12 Months) – Funds are disbursed in phases to pay the builder.

5️⃣ Move-In & Final Loan Conversion – The loan automatically converts into a 30-year fixed mortgage after construction.

FHA OTC Loan FAQs

📌 Who qualifies for this loan?

FHA loans are ideal for first-time buyers and those with lower credit scores.

📌 What credit score is needed?

A minimum 580 credit score is required to qualify for 3.5% down.

📌 Can I buy land with an FHA OTC Loan?

Yes! The loan covers both the land purchase and construction.

📌 Do I need a second loan after construction?

No! Unlike traditional construction loans, the FHA OTC eliminates the need for refinancing.

Start Building with an FHA OTC Loan Today!

If you’re ready to build your dream home but don’t have a large down payment, an FHA One-Time Close Construction Loan is the perfect solution. Contact us today to learn more and get started!