What is the interest rate on FHA construction- permanent mortgages?

The permanent mortgage loan interest rate is negotiated between the borrower and lender.

During the construction period, the interest rate may be variable. The lender and the borrower must enter into an agreement that:

  •   documents the range in which the interest rate may float during construction;
  •   documents the point of interest rate lock-in;
  •   specifies that the permanent mortgage will not exceed a specific maximum interest rate; and
  •   permits the borrower to lock in at a lower rate, if available and they have not already locked in a rate.

The borrower must qualify for the mortgage at the maximum rate at which the permanent mortgage may be set.

For additional information see Handbook 4000.1 II.A. 8. j.vi available at http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh