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Build your dream home with one loan.
An FHA construction loan turns a bare lot into the home you've pictured — financing the build and your permanent mortgage together, with as little as 3.5% down. North Bay Capital walks Sonoma County and California families through every draw, inspection, and signature.
What is an FHA construction loan?
Think of it as a helping hand from the federal government to build a home from scratch. Traditional construction financing often demands strong credit and 20–25% down. An FHA construction loan is insured by the Federal Housing Administration, so lenders can work with borrowers who wouldn't qualify for conventional construction money — opening the door to far more first-time builders.
That flexibility comes with structure. Your home must meet FHA safety and energy-efficiency standards, your builder must be a licensed, insured, lender-approved general contractor, and the property must be your primary residence. In return, you get a low down payment, forgiving credit guidelines, and a single loan that carries you from the first shovel of dirt to your first mortgage payment.
Two flavors of FHA construction financing
Most NBC clients choose the one-time close. Here's how the two compare.
Construction-to-permanent (one-time close)
Your one-stop option: a single loan covering construction and your permanent mortgage. One closing, one set of fees, and during the build you typically pay interest only on the funds drawn. When the home is finished, it converts automatically to a standard FHA loan — no second application, no re-qualifying.
FHA 203(k) renovation
Not building from scratch but buying a home that needs work? A 203(k) wraps the purchase and renovation into one loan. Limited 203(k) covers cosmetic and minor repairs up to $75,000; Standard 203(k) handles major, structural projects and room additions.
FHA land and construction loans: finance the lot and the build together
The part most buyers don't realize — you don't have to own the land first.
A one-time-close FHA construction loan can finance the land purchase and the construction togetherin a single loan with one closing. There's no separate lot loan to arrange first, and you don't need to already own the property — if you don't, the lot is simply purchased at the construction-loan closing. That's exactly what people are after when they search for an “FHA loan for land and construction.”
Already own your lot?Even better. The equity in land you already hold can count toward your 3.5% minimum investment — often shrinking the cash you bring to the table. The loan amount is based on the lesser of the finished home's appraised value or your total documented cost (land plus construction), so a lot you bought well — or were gifted — works in your favor.
- Buy the lot and build with one approval, one closing, one set of fees.
- Already own the land? Its equity can apply toward your down payment.
- The parcel must be residentially zoned, buildable, and have access to utilities.
- The combined land-plus-construction amount must fit within the FHA loan limit for your county.
Built for real-world budgets
Low down payment
As little as 3.5% with a 580+ score, versus 20–25% on most conventional construction loans.
Flexible credit
Scores from 580 — and from 500 with 10% down. Government backing makes lenders more willing to say yes.
Single closing
Construction and permanent mortgage in one loan means one closing and one set of fees.
Competitive rates
FHA insurance helps keep rates attractive even while you're still building.
Gift funds welcome
Your down payment can come from documented family gifts or eligible assistance grants.
No income caps
Unlike USDA loans, FHA construction financing has no household income limits.
Key requirements at a glance
Guidelines are forgiving, but the FHA still protects you and the lender with clear standards.
From application to keys in ~2–3 months
Get pre-qualified
We review your credit, income, and budget to confirm your price range and the right FHA program before you commit to plans.
Choose your lot, builder & plans
Lock in a licensed, insured general contractor your lender approves and finalize plans that meet FHA standards. We coordinate the cost breakdown and appraisal.
Underwriting & one closing
Your construction-to-permanent loan is underwritten and you close once — covering both the build and your permanent mortgage.
Build with scheduled draws
Funds release in stages as inspections clear. You typically pay interest only on what's drawn during construction.
Move in — it converts automatically
When the home is complete, the loan rolls into a standard FHA mortgage. No re-qualifying, no second closing.
FHA construction loans across California
Based in Santa Rosa, licensed statewide — we structure construction-to-permanent loans wherever your lot sits in California.
FHA sets loan limits county by county. For 2026 the one-unit limit runs from a floor of $541,287 in lower-cost areas up to a high-cost ceiling of $1,249,125— and San Francisco and the high-cost Bay Area counties reach that ceiling. Sonoma County sits between the two. Tell us your county and we'll confirm your exact 2026 limit.
FHA construction loan FAQ
How much do I need to put down on an FHA construction loan?
As little as 3.5% of the total project cost if your FICO score is 580 or higher. If your score falls between 500 and 579, you'll generally need 10% down. Your down payment can also come from documented gift funds or eligible down-payment assistance programs.
What credit score do I need to qualify?
The FHA's floor is a 580 FICO for the 3.5%-down option, though some lenders apply overlays requiring 620 or higher. Scores between 500 and 579 may still qualify with 10% down.
What is a one-time-close (construction-to-permanent) loan?
It's a single loan that covers both the construction phase and your permanent mortgage. You go through one closing and one set of fees. During construction you typically pay interest only on the funds drawn, then the loan converts to a standard FHA mortgage once the home is complete.
How long does the process take?
Most borrowers go from application to closing in roughly two to three months, depending on plan approval, permits, and your contractor's schedule.
Can I act as my own contractor or build it myself?
FHA construction loans require a licensed, insured general contractor that your lender approves — there's no DIY or owner-builder option, because the program relies on a qualified builder to meet FHA safety and quality standards. One myth worth clearing up: FHA does not publish an 'approved contractor' list for these loans. Your builder simply needs to be properly licensed, insured, and acceptable to the lender.
Does the home have to be my primary residence?
Yes. FHA construction financing is for owner-occupied primary residences — not investment properties or second homes. Unlike USDA loans, however, there are no household income caps.
Can an FHA construction loan cover both the land purchase and the construction?
Yes — an FHA one-time-close construction loan can finance the land and the build together in a single loan with one closing, so you don't need a separate lot loan first. If you already own the lot, your equity in the land can often count toward your down payment. The parcel does need to be residentially zoned and buildable, with access to utilities.
Do I need to own the land before applying for an FHA loan for land and construction?
No. With an FHA construction loan you can buy the lot and build at the same time under one approval, or roll an already-owned lot into the financing. Either way the land must be residentially zoned and meet FHA property standards — we'll review your specific lot early in pre-qualification so there are no surprises.
Is a construction-to-perm loan the same as a construction-to-permanent loan?
Yes — "construction to perm" is just shorthand for a construction-to-permanent loan. It's a single FHA loan that funds the build and then automatically converts into your permanent mortgage, with one closing and one set of fees. You never re-apply or re-qualify when construction finishes.
Do you offer FHA construction loan services in San Francisco and the Bay Area?
We do. North Bay Capital is based in Santa Rosa and arranges FHA construction loan services throughout San Francisco and the greater Bay Area — the Peninsula, East Bay, and Marin included. Keep in mind FHA loan limits are set by county, and high-cost Bay Area counties carry higher limits than most of the country.
Can I get an FHA construction-to-perm loan in Southern California?
Yes. North Bay Capital is licensed statewide in California, so we handle FHA construction-to-perm loans in Southern California as well as the Bay Area and North Bay. Because FHA limits vary by county, higher-cost areas like Los Angeles, Orange, and San Diego have larger limits — we'll confirm your county's 2026 figure.
Do you do construction loans in Modesto, Hanford, and the Central Valley?
Absolutely. We help buyers build throughout California's Central Valley, including Modesto (Stanislaus County), Hanford (Kings County), and the surrounding communities. Land tends to be more affordable inland than on the coast, which often makes building with an FHA construction loan especially attainable here.
Which Bay Area and North Bay cities does North Bay Capital serve?
From our Santa Rosa office we serve the entire North Bay and Bay Area, including Novato and Marin, Walnut Creek and the East Bay, and Burlingame and the Peninsula. We're licensed across California, so wherever your lot is in the state, we can structure your FHA construction financing.
I'm a contractor in Santa Rosa — can you finance my clients' builds?
Happily. An FHA construction loan is the homeowner's loan, not a contractor business loan, but we make it easy for Santa Rosa builders to get clients pre-qualified and through draws smoothly. If you need financing for your own commercial or spec-build projects, ask us about our commercial construction options.
Want the full walkthrough? Read our complete guide to FHA construction loans →
Where the rules come from.
Primary references for the numbers on this page — so you can verify before you decide.
Where to go next.
The programs, calculators, and guides that pair with FHA construction financing.
Let's price out your build.
Tell us about your lot and your plans and we'll map out a clear path — payment estimates, FICO tiers, and the documents to gather. No pressure, just a straight answer.