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Frequently Asked Questions
What are the loan-to-value requirements for the FHA One-Time Close?
What are the features of the FHA One-Time Close?
Are there any special considerations for the FHA One-Time Close?
Why is the FHA One-Time Close right for both the builder and the buyer?
Weststar Mortgage’s Close It, Build It™ Loan offers a smooth transition from construction to permanent financing with only one closing, one application and one set of fees - saving you both time and money.
During construction, builders will receive disbursements of funds to pay for labor and material costs. The builder is not required to make the interest payments during construction unless construction exceeds 120 construction period (or period agreed upon prior to construction). Loans are made directly to the buyer, allowing builders to manage their cash flow during a very tight credit market.
What is the FHA One-Time Close?
The FHA One-Time Close is also referred to as construction-to-permanent financing. It offers a simple financing option where the construction loan converts to permanent financing. In today’s tight credit market, conventional construction-to-permanent financing requires a minimum of 20% down and credit scores of 720 or better. By utilizing FHA financing for construction-to-perm financing, builders are able to expand their pool of potential buyers with lower down payment and credit score requirements.
What are the loan-to-value and down payment requirements for the FHA One-Time Close?
- Loan-to-Value requirements are 96.5%
- In some cases, if the buyer already owns the land, little to no out-of-pocket expenses are required.
- Minimum down payment on an FHA loan is 3.5%
What are the features of the FHA One-Time Close?
- Financing of new home construction up to FHA loan limits in the builders area
- Available for owner occupied primary residence
- Only one set of closing
- Rate protection for buyers
The Construction Phase features:
- 120 construction period
- 9.99% interest only with no payments due during construction
The Permanent Phase Mortgage includes:
- FHA fixed rate mortgage
- No prepayment penalties
Are there any special considerations for the FHA One-Time Close?
- Land must be owned by buyer or included in the construction sales contract.
- The borrower must have selected a builder acceptable to Weststar Mortgage.
- Final plans and specifications must be approved by both the builder and buyer, and are subject to Weststar Mortgage review.
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