FHA and building a new home (loan, approval, loan, lender)

[Waytoodeep03]

Has anyone done this before? Does the downpayment funds need to be available upon application or can they be procured over the 6-8 months up to closing on the house?

[SmartMoney]

The question is, will you be sharing this with the builder? Many builders out there don't want to build your home unless you have assets in place, especially on a low down payment program. Most builders require loan approval before the break ground. Seeing "purchaser to provide budget showing savings ability for required down payment" a real mood distraction when building a home. (Some lenders may not accept a budget. This is where working with the builder's lender can be beneficial).

[need4speed2012]

How to Build a Home With an FHA Loan (9 Steps) | eHow

[FalconheadWest]

Most builders will require you to get a pre-approval within 10 days of contract time. If the lender deems you not approved for lack of funds, they will not move forward with the house. Not sure how it is in your market, but that's how it's done in my market. No builder is going to risk you needing to wait until the last minute to have enough money to buy the house.