FHA Construction
Build a brand-new home with an FHA One-Time Close construction loan — as little as 3.5% down, FHA's flexible credit and debt-to-income guidelines, and a single closing that covers the land, the build, and your permanent FHA mortgage. Most lenders don't offer FHA for ground-up construction at all; we close them regularly. And if you'd like help with the down payment, we can pair this loan with down payment assistance that can cover your 3.5% — so building with little to no money out of pocket is on the table too.
Key Benefits
- As little as 3.5% down to build a brand-new home
- Flexible FHA credit & debt-to-income guidelines — more reachable than conventional construction
- One-time close — land, build, and permanent FHA mortgage in a single loan with one closing
- Optional down payment assistance can cover your 3.5% — build with little to no money out of pocket
- No requalifying or re-locking after construction — underwritten once, up front
- Automatic float-down at conversion — no request needed, no market-movement benchmark
- Site-built (including barndominium), modular, and manufactured homes eligible
- We register builders, manage draws, and ride the build from groundbreaking to keys
Who It's For
Buyers who want to build rather than buy existing and like FHA's accessibility — lower credit scores, higher debt-to-income, or a smaller down payment than conventional construction requires. Bring 3.5% down and build your home, or ask us about pairing the loan with down payment assistance if cash up front is the hurdle. First-time buyers and growing families especially: FHA One-Time Close is one of the most reachable paths to a ground-up build.
Why FHA One-Time Close
FHA is the most accessible loan for buyers who don't fit the conventional box — lower credit scores, higher debt-to-income, or simply a smaller down payment. FHA One-Time Close brings all of that to building a brand-new home: as little as 3.5% down, FHA's flexible underwriting, and a single closing that covers the land, the construction period, and your permanent FHA mortgage. Most lenders won't do FHA for ground-up construction at all — they steer you to a conventional construction loan that needs more money down and stronger credit. We close FHA OTC regularly.
Want help with the down payment? Pair it with assistance.
If the 3.5% down is the hurdle, we can do something most lenders can't: pair your FHA One-Time Close with down payment assistance that can cover that 3.5% — so qualified buyers can build with little to no money out of pocket. It's entirely optional. Plenty of our FHA construction borrowers simply put 3.5% down; for those who'd rather not, the assistance is there.
How it works: the assistance covers your FHA down payment; you'll still have standard closing costs to plan for (some of which may be able to be covered depending on your scenario). The assistance can be structured a few different ways depending on the program you qualify for, each with its own terms — we walk through exactly what it means for you before you commit to anything. The headline: you no longer need a large down payment saved to start a build.
How the one-time close works
Traditional construction financing is two separate loans: a short-term construction loan, then a separate permanent mortgage you have to qualify for again once the home is done — two underwrites, two closings, two sets of closing costs, and the risk your permanent loan falls through if your credit or income shifts during the build.
FHA One-Time Close collapses that into a single loan. We underwrite once, up front, to both the construction period and the permanent FHA payment. You close once. When construction completes, the loan automatically converts to your permanent FHA mortgage — no requalifying, no second closing, no new rate lock. And at conversion we automatically float your rate down to current market, so you finish the build at today's rate rather than the rate from months earlier.
What you can build
FHA One-Time Close works for a range of new-construction home types on a permanent foundation:
- Site-built homes, including barndominiums
- Modular homes (factory-built sections assembled on a permanent foundation)
- Manufactured homes on a permanent foundation (varies by program)
- Your primary residence — FHA is for owner-occupants
Builder registration — what we collect
Builders aren't registered with FHA or any agency for construction loans — each lender registers builders through its own process. Registration lets us confirm your builder has the capacity, experience, and insurance to complete your build on budget and on schedule. The builder provides this directly to us, so it doesn't slow your timeline:
- Company information — entity type, ownership, years in business, license number
- Project history and client references
- Trade and credit references
- Licensing — state contractor license where required, local permits
- Insurance — general liability and (where applicable) workers' compensation
- Financial statements (primarily on site-built scopes)
Once we have the full packet, the review itself typically takes just a few business days. If you've got a builder you love who's never registered for a lender's construction loan, we walk them through it.
Draws and the build
Construction funds are released as draws as the build progresses, not handed to the builder up front. Draws are based on percentage of completion: your builder submits a request against the project's cost breakdown, and we review the work in place, go through that breakdown line by line, and release funds for the portion that's actually complete. Our default is 5 draws on site-built homes and 3 on modular or manufactured — we can add more if your build calls for it.
A note on FHA mortgage insurance: FHA loans carry both an upfront and an annual mortgage insurance premium — that's true of every FHA loan, construction or not. It's part of what lets FHA offer low down payments and flexible credit. We'll show you exactly how it factors into your monthly payment so there are no surprises.
Why work with us on this
Construction lending is our specialty — we close these every week, manage the draws ourselves, and ride each build from groundbreaking to keys. Offering FHA One-Time Close at all puts us in a small group of lenders; pairing it with down payment assistance puts us in a smaller one. If building a home has felt out of reach because of the money needed up front, this is the program worth a conversation.
The FHA Construction Process
- 1
Get pre-approved
Before you design or shop land, we confirm what you qualify for on FHA — your 3.5%-down numbers — and, if you'd like, check your fit for down payment assistance. Either way you build to a budget that actually works.
- 2
Find your builder
Step two, before land. We register your builder (company info, history, references, license, insurance, financials). Once we have the full packet, review typically takes just a few business days.
- 3
Then find your land
With pre-approval and a registered builder in hand, land selection includes a real site assessment — your builder helps you evaluate the lot for buildability, slope, drainage, utilities, and site-prep cost.
- 4
Design + final numbers
Plans, the builder contract, and the land come together. We lock in your terms — 3.5% down, or your down-payment-assistance scenario if you went that route — and finalize disclosures.
- 5
One-time close
We close once before construction begins — no second closing later, no requalifying when the build wraps.
- 6
Build & move in
As work progresses, your builder submits draw requests; we review the work in place against the cost breakdown and release funds by percentage of completion. When the home is done, the loan auto-converts to your permanent FHA mortgage — and we automatically float your rate down to current market. Keys to your home.
Frequently Asked Questions
How much do I need down to build with FHA?
As little as 3.5% of the total — the standard FHA minimum, applied to a ground-up build. That's already far less than conventional construction loans typically require. And if the 3.5% is the hurdle, we can pair the loan with down payment assistance that may cover it, so building with little to no money out of pocket is also possible. You'll have standard closing costs either way, and we'll show you your real numbers up front.
Is the down payment assistance required, or optional?
Completely optional. Many of our FHA construction borrowers just put the 3.5% down. The assistance is there for buyers who'd rather not — it can cover your FHA down payment. It can be structured a few different ways depending on the program you qualify for, each with its own terms, and we walk through exactly how it works before you commit to anything. Reach out and we'll lay out the options for your situation.
Do many lenders offer FHA construction with down payment assistance?
Very few. Most lenders don't offer FHA for ground-up construction at all, and fewer still pair it with down payment assistance. Construction lending is operationally complex, and layering DPA on top adds another set of requirements most lenders won't take on. It's a core part of what our team does.
How is this different from a VA construction loan?
If you're a Veteran or eligible service member, VA One-Time Close is usually the stronger option — $0 down with full entitlement and no monthly mortgage insurance. FHA One-Time Close with down payment assistance is the path for buyers who don't have VA eligibility but still want to build with little money up front. Not sure which fits? We'll tell you straight.
Do I make payments during construction?
On a true FHA One-Time Close, typically no — the construction-period interest is built into the loan, so you avoid carrying two housing payments while building. Your first regular payment starts once the home is complete and the loan converts to your permanent FHA mortgage.
What home types qualify?
Site-built homes (including barndominiums), modular homes on a permanent foundation, and manufactured homes on a permanent foundation (varies by program). FHA is for owner-occupied primary residences. We confirm eligibility for your specific home and plans up front.
What happens when construction is done?
Final inspection, certificate of occupancy, final builder payment, and you get keys. The loan automatically converts to your permanent FHA mortgage — no new closing, no new credit check, no new rate lock — and we automatically float your rate down to current market at conversion. You start your regular monthly payments as a homeowner.
Related Programs
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