Home Construction Loans
In today’s hot market, it can be hard to find the house you need or want for the price you can afford. Add to that any specific neighborhood you need to be in, or needing extras like a mother-in-law suite and you’re going to have a hard time finding the right house for you. However, did you know that more times than not, it can be more affordable to buy land and build your home? Yep, it’s true. That’s why we offer competitive home construction loans to our clients- so you can get into your dream house in your dream location.
Home Construction Loans
In today’s hot market, it can be hard to find the house you need or want for the price you can afford. Add to that any specific neighborhood you need to be in, or needing extras like a mother-in-law suite and you’re going to have a hard time finding the right house for you. However, did you know that more times than not, it can be more affordable to buy land and build your home? Yep, it’s true. That’s why we offer competitive home construction loans to our clients- so you can get into your dream house in your dream location.
What is a Home Construction Loan?
There are two main types of home construction loans. The first is called the “construction to permanent home” loan and the other is a construction-only loan.
Construction to Permanent Loan
A construction to permanent home loan is a loan that funds the cost of buying the land and building the house. Once the house is complete, the loan transfers to a traditional home mortgage. Here are some facts about this type of loan:
- You only pay closing costs and fees once
- During construction, you only pay the interest on the outstanding balance of the loan
- The construction loan is usually a variable interest rate which can change during the process which could affect what you pay
- Once the loan is converted to a traditional mortgage, you start paying on both interest and principal.
Construction Financing
- SFR’s, Modular, Manufactured and MuiltiFamily
- VA – No Down Payment Required
- USDA – No Down Payment
- Conventional – 10% Down Payment
- Jumbo Options
- Owner Occupied
- 2nd Home
- Investment OK
Construction to Permanent Home Loan
A construction to permanent home loan is a loan that funds the cost of buying the land and building the house. Once the house is complete, the loan transfers to a traditional home mortgage. Here are some facts about this type of loan:
- You only pay closing costs and fees once
- During construction, you only pay the interest on the outstanding balance of the loan
- The construction loan is usually a variable interest rate which can change during the process which could affect what you pay
- Once the loan is converted to a traditional mortgage, you start paying on both interest and principal.
Construction to Permanent home loans are great for people or families that need to rent another home until construction is complete.
Construction to Permanent Home Loan
- SFR’s, Modular, Manufactured and MuiltiFamily
- VA – No Down Payment Required
- USDA – No Down Payment
- Conventional – 10% Down Payment
- Jumbo Options
- Owner Occupied
- 2nd Home
- Investment OK
Construction Only Loan
A construction only loan is just as it sounds- it’s a loan that only covers the construction phase. Once the construction is complete, you then have to apply for a traditional home loan. This can be a smart option for people building their next home while still living in their current home and needing to keep monthly costs down.
However, in the end, it can end up costing you a lot more because you have to take out two loans with two different closing fees. Additionally, if your financial status changes or you lose a job it’s very possible that you won’t qualify for the house you built.
What Home Construction Loans Cover
Construction home loans cover the costs associated with building a home. Some of those costs can be:
- Land
- Building permits
- Contractor labor
- Framing
- Materials
- Roofing
- Excavation if needed
- and much more!
How to Qualify
As with any home loan, construction loans require that you have good standing credit, moderate debt to income ratio, stable income and may require a minimum down payment of 0% to 20% depending on the program
Apply Today
If you’re looking at building a home, contact one of our team members today to learn more or apply.
