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VA and FHA One-Time Close Construction Loans

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Construction Loan Limits


Construction Loan Limits
At the time of this writing, the FHA is preparing to release 2024 FHA loan limits for purchase loans, construction loans, and renovation mortgages.

If you are building a home and are unsure what loan limits may apply to you, keep reading, we address this issue below. Some might wonder if delaying their loan application until the new year is a good idea, assuming loan limits will be higher. 

That’s not always a safe assumption to make. And for those who wait for the loan limits for government-backed mortgages for 2024 to be published to decide whether to commit this year or next, there is an important factor you should know about.

Loan Application Timing Counts

Some borrowers want to know which numbers count if the prior year's VA or FHA loan limits are lower than those for the coming year. If you start an application in 2023 and finish it in 2024, which limits apply?

For FHA One-Time Close mortgages and other loans, the limit that applies depends on what date the case number was assigned.

Was your FHA construction loan case number assigned before the new year? If so, the previous year’s loan limits apply to your single-close construction loan.

When a home loan case number is assigned after the new year (even if you applied in the previous year), your FHA loan limits or VA construction loan limits are the ones effective in the new year.

Jumbo Loans

If you need more loan than the current limit allows when it’s time to build your dream home, consider applying for an FHA or VA jumbo loan, which exceeds the county limit but has higher FICO score requirements. You'll need to discuss whether or not your participating lender will approve a jumbo loan for construction with each lender you compare.

If you were already concerned about your ability to qualify for an FHA mortgage before considering a jumbo loan, it may be wise to build in some extra time to work on your credit and debt ratios first.

What To Know About Home Loan Limits

If you buy a home with an FHA construction loan or a VA single-close construction loan, your loan limits go higher when applying for a loan on a multi-unit property. 

There’s just one caveat here. That information is great for purchase loans, but many participating One-Time Close lenders don’t typically approve those loans for multi-unit housing.

And not all housing markets feature identical costs. Be sure to check when shopping in an area the FHA deems to be a high-cost area. FHA and VA loan limits are higher in these counties. Remember, veterans who choose to build with a One-Time Close loan are typically not subject to VA loan limits unless they don’t have full VA loan entitlement.

FHA loans in high-cost areas have higher loan limits, but they do not feature a corresponding increase in FHA loan approval requirements. On paper, the FHA does not ask for higher FICO scores for home loans in high-cost areas. 

That said, your One-Time Close lender will set standards above FHA minimums. Construction loans are higher risk mortgages than purchase loans, and there are corresponding FICO score requirements, FHA loan limits to consider, and other details. You’ll want to build in extra time to build a home rather than buying an existing one.

Want More Information About One-Time Close Loans?

We have extensively researched the FHA (Federal Housing Administration) and the VA (Department of Veterans Affairs) One-Time Close Construction loan programs.

We have spoken directly to licensed lenders that originate these residential loan types in most states, and each company has supplied us with the guidelines for their products. We can connect you with mortgage loan officers who work for lenders who know the product well and consistently provide quality service.

If you are interested in being contacted by a licensed lender in your area, please send responses to the questions below. All information is treated confidentially. 

OneTimeClose.com provides information and connects consumers to qualified One-Time Close lenders to raise awareness about this loan product and to help consumers receive higher-quality service.

We are not paid for endorsing or recommending the lenders or loan originators and do not otherwise benefit from doing so. Consumers should shop for mortgage services and compare their options before agreeing to proceed. 

Please note that investor guidelines for the FHA and VA One-Time Close Construction Program only allow for single-family dwellings (1 unit) – and NOT for multi-family units (no duplexes, triplexes or fourplexes).

In addition, the following homes/building styles are not allowed under these programs: Kit Homes, Barndominiums, Log Cabin Homes, Shipping Container Homes, Stilt Homes, Solar (only) or Wind Powered (only) Homes. 

Contact Us:  Send Us Your Request – Spam Safe 

Please send your email request to [email protected], which authorizes OneTimeClose.com to share your personal information with one mortgage lender licensed in your area to contact you. 

1.  Send your first and last name, e-mail address, and contact telephone number.

2.  Tell us the city and state of the proposed property.

3.  Tell us your and/or the Co-borrower’s credit profile: Excellent – (680+), Good - (640-679), Fair – (620-639), or Poor- (Below 620). 620 is the minimum qualifying credit score for this product. 

4.  Are you or your spouse (Co-borrower) eligible veterans? If either of you is an eligible veteran, down payments as low as $0 may be available up to the maximum amount your debt-to-income ratio per VA will allow – there are no maximum loan amounts as per VA guidelines.

Most VA lenders will go up to $1,500,000 and review higher loan amounts on a case-by-case basis. If not, the FHA down payment is 3.5% up to the maximum FHA lending limit for your county.
 
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