How the FHA Construction One-Time Close Program Works in Arizona
The FHA-one time close construction loan is also referred to as the construction-to-permanent, C2P mortgage. This loan allows you to take a short-term, interim, or temporary construction time as well as a long-term permanent mortgage. The borrower using the FHA one-time close plan must qualify for the long-term mortgage to use the C2P program. Upon the completion of the construction, the closed loan of the homeowner is then modified into a permanent fixed-rate loan.
- If you buy a land in the transaction, the construction-to-permanent loan will be structured as a C2P loan transaction with a buying price.
- If you own the land during the application process, the C2P loan will be structured as a C2P loan transaction as a refinance
- The C2P loan is needed to conform to all the Fannie Mae and FHA construction guidelines.
Construction loans are provided by FHA to eligible borrowers anywhere in Arizona. They are mostly the one-time close instead of the conventional two-time close loans. Since it is a 203b loan, all the requirements still apply. The requirements include borrowers having an allowed income, credit, and assets. The low down payment of 3.5% of the sale price is still applicable. However, you will only be expected to make the payments once the construction has been completed.
Borrowers Must Apply and Qualify for an FHA Loan With Their Lenders
The borrower must find a builder who will have to be approved by the Arizona FHA approved lenders. All the documents the builder will submit have to follow the guidelines set by FHA:
- The builder and the borrower must agree on the final selling price
- The loan is treated as a regular FHA 203b loan
- Construction of the home must be completed within five months
- The final inspection is done by the borrower who will then proceed to sign the certificate of occupancy and make the payment 60 days from the date.
- Benefits of an Arizona FHA construction loan
- All FHA 203b guidelines apply, and there are no overlays
- There is no payment required during the construction process
- The land of the borrower can be used in building the home
- The loan is available in all of the United States
- Borrowers do not make any payment until the entire construction is completed. They will do so once the inspection is done and the certificate of occupancy has been signed.
The Arizona FHA construction loan is a standard FHA 203b loan meaning that all FHA requirements apply. All the conditions are similar to the conventional way of purchasing a home as if the borrowers are trying to buy an already existing home. The FHA 203b one-time construction loan is one of our main products. To avoid any doubts and get the stress out of your way, you can consult our Arizona FHA construction loan experts today. They will guide you on what to do and not what to do when dealing with an FHA construction loan.