Can I get a Construction Loan from FHA or what do I do?
Unfortunately, FHA does not offer any new home construction loans, so you will likely need to explore other options if your goal is to build a new home from the ground up. The FHA does offer loans to borrowers who wish to remodel or rehabilitate an existing property, but consumers who wish to purchase land and build a new home from the ground up must seek other options.
There are two basic types of construction loans: construction-only loans and construction-to permanent loans; the primary difference between these two types of loans is what will happen after your home is built. Construction-only loans are short-terms loans which are designed to pay for the construction of the home and which must be repaid after the home is built.
Many borrowers take out a standard mortgage after the home construction is complete to repay their short-term construction loan. You could get an FHA Refinance at thsi point, but only after the home is built.
The key benefit to using construction-only loans is that they provide borrowers with flexibility to finance their completed home with a wide-variety of mortgage loan products, giving them freedom to shop around for the best mortgage interest rates and terms across the market. To read more about mortgage loans and the various programs available to borrowers, I encourage you to visit the Bills.com mortgage page at http://www.bills.com/mortgage/
Construction-to-permanent loans are a product in which the same loan, which starts as a construction loan, automatically converts to a mortgage loan after the home construction is complete. This type of loan is probably the more popular of the two common types of construction loans, for several reasons. First, they are convenient for borrowers, as borrowers do not need to worry about finding a mortgage loan to finance the property and pay back their separate construction loan; building a home can be very stressful, and the fewer issues that borrowers need to worry about, the easier the process becomes. Borrowers also do not need to pay for two loan closings. Second, construction-to-permanent (CtoP) loans are often encouraged by lenders due to the fact that this type of loan allows the same lender to keep control and retain the profits of both the construction loan and the post-construction mortgage; these loans, therefore, are often more profitable for lenders. One of the more popular CtoP loans is the Fannie Mae HomeStyle Construction-to-Permanent home loan—to read more about this type of loan, you can visit http://www.communityinvestmentnetwork.org/nc/single-news-item-states/article/home-construction-and-renovation-homestyle-construction-to-permanent/?tx_ttnews%5BbackPid%5D=750&cHash=c4b6738179
Even though FHA does not offer new home construction loans, you should be able to find a loan to suit your needs, as many different types of construction loans are available, with many different terms and interest rates. Because of the wide variety of loans and lenders, I encourage you to shop around to find the best interest rates and loan terms available to you.
I wish you the best of luck in finding a loan allowing you to build your new home, and hope that the information I have provided helps you Find. Learn. Save.