SS Memo 06-09


Date: November 14, 2006

One-Step Construction Loans

(Sections 1003 and 9001)

Section 1003.09 has been amended to reflect changes to one-step construction loan requirements. Restrictions to the term of the interim portion of the loan have been eliminated. Once the home is completed, the term of the permanent loan may not exceed 30 years. AHFC will not purchase the loan until construction is complete and the loan has been modified to the amortized permanent loan.

Section 9001.03 has been amended to eliminate the One-Step Construction Loan Note, (Form PUR-5). In its place, Lenders may use the FNMA Note Form 3202. Typically borrowers will also sign a Note Addendum or Modification that specifies the interest rate and payment terms during the construction phase. When the permanent phase begins, the borrower may sign a Permanent Loan Note or Addendum, modifying the Note, as well as a Permanent Loan Extension Agreement or Modification Agreement, modifying the Deed of Trust. HUD 184 one-step loans are secured by documents acceptable to HUD. 

Requirements for the Rural Enhanced Loan Program (RELP), Section 7010, remain unchanged.

New Construction Inspections and Building Codes

In the past, AHFC issued letters notifying inspectors of code changes and established an effective date for new inspection requirements. With the implementation of HB9, which requires home inspectors be registered with the Department of Occupational Licensing, AHFC discontinued publishing a list of approved inspectors. Likewise, AHFC has determined it is the responsibility of individual home inspectors to keep current on code changes in the geographical areas in which they perform inspections. Effective immediately, licensed inspectors are referred to the jurisdiction having authority for the property being inspected. In some cases this might be a local governing body, in others it will be a representative of the State Fire Marshall's office.

Personal Property

(Refer to Section 1003.06)

Recent loan audits reveal a growing disregard for requirements regarding personal property. Lenders are reminded that AHFC does not finance the value of personal property or purchase incentives. If AHFC determines personal property is not adequately addressed, the lender may be required to remedy the situation. Possible remedies may include buying down the loan balance or purchasing mortgage insurance.


Replacement forms are available in MSWord and PDF. Adobe Acrobat 5 is required to read and print PDF files.

Revised or Deleted Forms

PUR-5 Deleted


Attachments are available in PDF.