Can You Use an FHA Loan for New Construction?

Quick answer

Yes. You can use an FHA loan to buy a newly built home with 3.5% down and a 580+ credit score, as long as the builder provides HUD's required documentation — typically a Builder's Certification and a warranty or 10-year protection plan. Without it, FHA financing on a home under a year old can be limited to 90% of value.

What does HUD require for a newly built home?

HUD's Handbook 4000.1 sets documentation rules for properties that are proposed, under construction or less than one year old. Lenders generally need the Builder's Certification of Plans, Specifications and Site (HUD-92541) and, depending on how the home was inspected, the builder's one-year Warranty of Completion of Construction (HUD-92544) or enrollment in a HUD-accepted 10-year protection plan. Your loan officer will collect these from the builder.

When is FHA financing limited to 90%?

If a new home wasn't built under the required inspections and doesn't have an acceptable 10-year warranty, HUD limits the loan to 90% loan-to-value — meaning a 10% down payment instead of 3.5%. Confirm the builder's documentation before you sign.

FHA one-time close construction loans

If you're building rather than buying from a builder's inventory, FHA's construction-to-permanent option combines the construction financing and the FHA mortgage into one closing. The same 3.5% minimum down payment and county FHA limits apply. Not every FHA lender offers it.

Frequently asked questions

Yes. FHA allows seller (including builder) contributions of up to 6% of the sales price toward closing costs, prepaids and discount points.

The appraiser uses the same FHA standards; for proposed or under-construction homes the value is based on plans and specs, with a final inspection at completion.

Sources

HUD Single Family Housing Policy Handbook 4000.1

Data last updated October 24, 2026.

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Figures on this page are estimates for educational purposes only and are not a loan offer or commitment to lend. Rates, loan limits, fees and assistance programs change frequently and vary by lender, location and borrower profile. Confirm current terms with a licensed loan officer.