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goodygoody
Posts: 199
Registered: ‎04-07-2009
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FHA to build home on land I own?

Hi there. I just received a small inheritance, and my husband and I are considering using the money to buy a piece of land (5 acres or more), and then hopefully build a home on the land and have a mortgage on the home. I was wondering, though, if FHA considers you a "first time home buyer" if you own land already? Also, do they finance modular/prefab homes, or would it have to be a brand new construction with a contractor?  Thank you for any advice!

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goodygoody
Posts: 199
Registered: ‎04-07-2009
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Re: FHA to build home on land I own?

I'd mention that when I said "modular" I am thinking of anything manufactured...  I read somewhere that there's actually a different between modular and manufactured, but need to keep reading to really understand what the difference is.  I guess I'd wonder about both.  Or kit homes, or anything else unusual if anyone knows...  Thank you again for reading!

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boomhower
Posts: 1,863
Registered: ‎09-20-2011
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Re: FHA to build home on land I own?

Big difference between modular and manufactured.  Manufactured is your traditional single or doublewide.  Modular are built completely differently.  Some low end modulars look like doublewides but under the skin are built a lot differently.  Some of your higherend modulars you can't tell the difference from stick built, some argue the quality is actually better than stick built.  FHA does financing on both but I don't have a clue as to the details.

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goodygoody
Posts: 199
Registered: ‎04-07-2009
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Re: FHA to build home on land I own?

Just bumping, hoping someone might have more info on this.  Does FHA do regular 30 year financing on both modular or manufactured?  I'm confused about whether manufactured have to be funded through a personal loan...

 

Thanks!

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boomhower
Posts: 1,863
Registered: ‎09-20-2011
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Re: FHA to build home on land I own?


goodygoody wrote:

Just bumping, hoping someone might have more info on this.  Does FHA do regular 30 year financing on both modular or manufactured?  I'm confused about whether manufactured have to be funded through a personal loan...

 

Thanks!


i don't know FHA's policy but in general from what I have seen to do a standard mortgage you have to have a brick underpinning done so it's no longer "mobile".(around $5k depending on the size)  Otherwise you will likely have to seek other financing for it.  Modular's are financed just like stick built, but whether you have to still do a construction loan I don't know.

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Booner72
Posts: 3,889
Registered: ‎05-24-2011
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Re: FHA to build home on land I own?

From what I have read you can get a conventional loan with as low as 5% down.  Is that why you want FHA?  BC of the low down payment?

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Senior Contributor
StartingOver10
Posts: 4,581
Registered: ‎03-06-2010
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Re: FHA to build home on land I own?

Actually, construction loans are an entirely different type of loan.

 

FHA loans are end user loans where you are purchasing the land and the structure together.

Construction loans are short term loans that are issued in draws as the work is completed. The land under the structure is part of the collateral. At the end of the loan a construction loan can turn into a permanent loan, but you would know that up front. You will need to contact lenders in your area and inquire about construction loans. The type of construction, the contractor, the location and naturally your credit and collateral all make a difference.

 

Do you own the land free and clear?

If not, you can generally get enough in the construction loan to pay off the lienholder for the land.

 

Talk to several banks regarding construction loans. They are more complicated than your average FHA loan - even more complex than a 203k type loan.

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goodygoody
Posts: 199
Registered: ‎04-07-2009
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Re: FHA to build home on land I own?

Yes, our plan would be to buy the land so we owned it free & clear, then use a mortgage to build a modular or manufactured home.  And we'd like to use FHA because of the low down payment.  But does this apply to their construction loans as well?  We were thinking of manufactured since they're less expensive - if we put a manufactured home on a foundation, would that satisfy the need for a foundation?  A local financial advisor on the radio was saying that FHA is now around 3.5%, so this was another factor.  But would these factors all be the same for a construction loan? 

 

We also wondered about all of this with USDA and whether they do financing for construction on land you already own. 

 

Part of our thought here is that if we built a manufactured/modular home, they usually come with a warranty, and we wouldn't have to worry about fixing anything for a while, which would give us adequate time to save enough for any major repair that might happen later on. 

 

Thanks!

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StartingOver10
Posts: 4,581
Registered: ‎03-06-2010
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Re: FHA to build home on land I own?

FHA requires a downpayment of 3.5% (it used to be 3%).

The rate is anywhere from 3.5% to 4% right now.

 

They don't do construction loans. They do end loans only.

 

Construction loans are conventional loans.


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