Build with 3.5% down and one closing.
An FHA one-time close construction loan lets eligible buyers finance the lot (if needed), the build, and the permanent FHA mortgage with one closing and as little as 3.5 percent down. Ken Clark Jr. helps buyers in Sacramento, Northern California, New Jersey, and nationwide where licensing permits plan FHA construction through PRMG programs.
Short answer: it is an FHA-insured loan used to build a new home, most often as a one-time close loan that combines construction financing and the permanent FHA mortgage in one closing.
You close once, construction funds are released to the builder as work is inspected, and the loan converts to the permanent FHA mortgage at completion. FHA mortgage insurance applies once the loan is in its permanent phase. More on one-time close and FHA loans.
Short answer: FHA allows as little as 3.5 percent down for eligible borrowers. Land you already own may help cover it.
Upfront and annual FHA mortgage insurance apply. FHA county loan limits cap the loan amount. See land equity.
Short answer: in most cases, none. On FHA and VA one-time close loans, the interim interest during construction is typically paid by the builder and built into the contract price, so your first mortgage payment is due after the home is finished.
You are typically responsible for property taxes that come due during construction. If you are renting while you build, that is usually your main housing cost during the build.
Short answer: buyers who meet FHA credit and income guidelines, building a one-unit primary residence.
| Requirement | Generally |
|---|---|
| Credit | Minimum scores for FHA one-time close commonly start around 620 with an automated approval, and higher for manufactured homes, depending on program guidelines |
| Income and DTI | Automated underwriting findings |
| Down payment | 3.5% minimum for eligible borrowers |
| Occupancy | Primary residence, one unit |
| Loan amount | FHA county loan limits |
Short answer: yes. The lot can be purchased at closing, or a lot you own can be included, with any land loan paid off at closing.
If the land was a gift or you have owned it for a required period (commonly 6 months on FHA), its current value rather than your purchase price may be used. See buying land and building.
| Home type | Generally |
|---|---|
| Site-built (including panelized) | Eligible |
| Modular | Eligible |
| Multi-section manufactured on a permanent foundation | May be eligible, with added requirements |
| Single-wide manufactured | Commonly ineligible |
| Barndominium, post-frame, log, metal, container | Commonly ineligible on government one-time close |
One-unit, owner-occupied homes. Acreage limits may apply, commonly around 10 acres for manufactured homes.
Short answer: your builder must be licensed, act as the general contractor under a fixed-price, turnkey contract, and complete builder registration. Owner-builder and do-it-yourself projects are not eligible.
Builder registration is a documentation review for program eligibility, not an endorsement of the builder. It is commonly completed once, before the first project. Details: builder registration.
Short answer: construction commonly needs to be completed within about 9 months of closing, with up to 12 months considered case by case, depending on the program.
Local inspections and a certificate of occupancy are part of completion. Build in time for permits and weather.
From application to closing commonly takes about 60 to 75 days or more, because the builder, plans, and appraisal all have to come together.
Where available: PRMG one-time close programs are available in every state where PRMG is licensed, which is all states except New York, subject to eligibility and program guidelines. In California, building, well, and septic permits are typically required before closing.
Answered by Ken Clark Jr., Certified Mortgage Advisor. Program availability and requirements vary and are subject to change.
Yes. An FHA one-time close construction loan may finance land, construction, and the permanent FHA mortgage with one closing, subject to FHA guidelines, builder requirements, and program availability.
As little as 3.5 percent for eligible borrowers. Land equity may help.
In most cases, no. The interim interest is typically paid by the builder and built into the contract price. You typically pay property taxes that come due during construction.
Minimum scores for FHA one-time close commonly start around 620 with an automated approval, and are higher for manufactured homes, depending on program guidelines.
No. FHA one-time close requires a licensed builder acting as the general contractor under a fixed-price contract.
Multi-section manufactured homes on a permanent foundation may be eligible, with added requirements. Single-wide homes are commonly ineligible.
Barndominiums and post-frame homes are commonly ineligible on government one-time close programs.
Yes. FHA county loan limits apply to the total loan amount.
FHA mortgage insurance applies to the permanent loan once construction is complete.
No. The loan converts to the permanent FHA mortgage without requalifying.
Yes. PRMG one-time close programs are available in California and every other state where PRMG is licensed (all states except New York), subject to eligibility and program guidelines. In California, permits are typically required before closing.
Guidelines change. Verify current program requirements with Ken Clark Jr. before relying on them for a transaction.
Disclaimer: This content is for educational purposes only and is not a commitment to lend, a guarantee of approval, or a rate quote. Loan programs, down payment requirements, terms, and eligibility depend on borrower, property, project, builder, and program qualifications, are subject to underwriting, and vary by state. Not all applicants or projects will qualify. Builder registration is a documentation review for program eligibility and is not an endorsement of any builder. Equal Housing Opportunity. Paramount Residential Mortgage Group, Inc. (PRMG), NMLS #75243. Ken Clark Jr., NMLS #225375. PRMG is licensed in 49 states, excluding New York.
Certified Mortgage Advisor and Branch Manager at PRMG Mortgage (NMLS #75243). 28 years in mortgage lending. Specializes in FHA, VA, conventional, DPA, jumbo, Non-QM, renovation, and construction financing for buyers and investors in Sacramento, New Jersey, and nationwide. PRMG is licensed in 49 states, excluding New York. Three-time Gold Award winner for Highly Reviewed Mortgage Team in Sacramento (2023, 2024, 2025). NMLS #225375.
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