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When it’s time for you to make the move into a different home, whether it’s a bigger home for your growing family, a first home, you’re downsizing or you’re moving, a variety of options present themselves to you, leaving you with questions. Do I rent or buy? Do I buy a fixer-upper? What neighborhood do I want? Is building my dream home really in the picture? Your options may seem exhausting. Building a custom home — your dream home — is within grasp for many residents of Northwest Arkansas. 

If you’ve been considering a custom-built home in NWA, you may not know where to start. Afterall, buying and building are two related but different options. If you’ve purchased a home before, you’re probably familiar with some of the different loan options available. An FHA loan has more than likely come up in your internet searches or through lenders you’ve worked with, but what are they?

FHA Basics

The Federal Housing Administration is a government agency that provides mortgages with relatively low down payments and certain protections for lenders. FHA loans are a first choice for first-time homebuyers, but also millions of other Americans. Unlike certain other types of mortgage loans, FHA loans have reasonably “easy” requirements: a credit score over 580 (although you may need a higher FICO score for an FHA one-time close loan), only 3.5% down, and a debt-to-income ratio less than 43%. The FHA is a little different from other government agencies as it operates fully from its own income (the mortgage insurance premiums). 

How Does FHA Work Differently for New Construction?

Many home buyers looking into new construction and custom built homes find out the process varies from traditional mortgages as you need a loan for the lot, construction and a loan for the actual home. The FHA loan is a one-time close, rolling all of these purchases into one mortgage loan. 

However, there are some additional rules to follow with the FHA one-time close loans. You may have restrictions on size and other considerations. In some cases, you may need to have a building permit prior to approval – and building permits are not an overnight transaction. 

To avoid certain setbacks, FHA recommends speaking with a lender prior to anything else regarding building your dream home. You and your lender will discuss your needs, budget and timeline, allowing you to make informed decisions throughout the process and not waste time or money on nonessential or impossible tasks. 


FHA one-time close loans provide many benefits to Americans looking to finally build their dream home – a custom home in beautiful NWA. If you’ve been considering upgrading your home to a Cobblestone home, speak with us and your lender regarding your loan options.