Fha Loan To Buy Land And Build Home May 2026

Instead of taking out two separate loans—one for the land and construction, and another for the permanent mortgage—the FHA "One-Time Close" program combines them. This means you only deal with one application, one approval process, and one set of closing costs. During the building phase, the loan typically covers the land purchase and contractor disbursements. Once construction is complete, the loan automatically converts into a standard FHA fixed-rate mortgage. Key Benefits

Once approved, you close on the loan. The lender pays the land seller and sets up an escrow account to pay the builder in "draws" as milestones are reached. fha loan to buy land and build home

You must use a licensed, insured, and bonded general contractor. You generally cannot act as your own builder (Self-Build) under this program. Instead of taking out two separate loans—one for

Most lenders require a minimum score of 620, though some may allow lower scores with a higher down payment. You must use a licensed, insured, and bonded

After the final inspection and certificate of occupancy are issued, the loan converts to a permanent mortgage.