Yes — FHA can finance new construction in certain structures, including purchases of newly built homes and construction-to-permanent loans when your lender offers them. Historically as little as 3.5% down may qualify, but MIP, builder approvals, and FHA property standards all matter before you break ground.
FHA construction-to-permanent loans wrap lot acquisition (when included), hard costs, and soft costs into one FHA-insured mortgage that converts to permanent financing at completion. Funds release in draws as the builder hits milestones — you do not receive the full construction budget at closing.
Not every FHA lender offers construction-to-perm. Ryan and Steve confirm investor availability early so you are not under contract with a builder your chosen lender cannot finance. Mortgage insurance premium (MIP) applies upfront and monthly on most FHA files, including construction.
If construction-to-perm is unavailable, buying a completed new build with a standard FHA purchase loan may be the cleaner path — we compare both before you commit to plans.
The right FHA structure depends on whether the home is already built or still on the drawing board.
When a builder finishes the house before you close, a standard FHA purchase loan may apply — subject to FHA property standards and the builder's willingness to wait for FHA appraisal and underwriting.
One FHA loan covers construction and converts to permanent financing at completion. Requires approved builder, plans, specs, and a participating FHA construction lender.
Licensed builders submit detailed cost breakdowns and draw schedules. FHA and the lender review plans before funding begins — changes mid-build may require re-approval.
Upfront and annual mortgage insurance premiums apply on most FHA construction loans, increasing total cost compared to conventional options — weigh that against the lower down payment entry point.
FHA construction files need more documentation than a simple resale purchase.
Step 1
Confirm your FHA construction-to-perm investor before signing a builder contract.
Step 2
Architectural plans, specs, cost breakdown, and draw schedule go into the loan file.
Step 3
Construction funds release as milestones pass FHA and lender inspections.
Step 4
Final inspection clears; MIP continues on the permanent mortgage per FHA rules.
Compare FHA construction with other program options for your build.
VA construction-to-permanent options for eligible veterans and service members.
Conventional one-close and two-close construction products compared.
How construction financing works from plans to permanent mortgage.
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Yes — FHA can finance newly built homes and, when a lender offers the product, construction-to-permanent structures that roll ground-up costs into one FHA-backed mortgage. Availability depends on the investor — not every FHA lender originates construction-to-perm files.
Historically FHA allows as little as 3.5% down when credit and debt-to-income guidelines are met — on both the lot (if financed) and construction costs. You may still need cash for closing costs, builder deposits, and contingency reserves outside the minimum investment.
Builders must meet FHA and lender approval requirements. The finished home must comply with FHA minimum property standards and local building codes. Plans, specs, and a detailed cost breakdown are submitted with your application before draws are released.
No. All loans are subject to credit, income, property, and builder approval. Rates, MIP, and program availability can change without notice and may not be available in all states. This page is educational — contact us for a personalized pre-approval review.
Confirm lender availability, builder fit, and your minimum investment before you order plans. Ryan & Steve map FHA construction-to-perm options against buying a completed new build — averaging a 20-day close on straightforward files.