A construction loan to build a house on your own land is not out of reach even for a first-time homebuyer.
There are multiple options for building a home from the ground up; you can apply for an FHA One-Time Close loan, a VA construction loan, and there are even USDA construction loans that allow qualified borrowers (this is a need-based loan) to build a house instead of buying an existing one.
But there are some mistakes some house hunters make when pursuing a construction loan you should avoid; sidestepping these can definitely help you save time and money.
Save Early For Your Down Payment
Some construction loans (VA and USDA) have no down payment requirement. All others do.
And even the VA and USDA equivalents of an FHA One-Time Close mortgage may require a down payment if your loan needs exceed the loan guaranty limits for your area. Saving early is a very smart choice.
And it’s not just the down payment you need to be concerned with; saving early means anticipating certain closing costs, fees, and expenses you will need to anticipate.
Start saving early even for a VA 0% down loan. A no down payment loan is a big advantage, but there are still closing costs to think about even with no money down construction loans.
Get Pre-Approved As Early As Possible
If you start trying to find an approved contractor or an architect without pre-qualifying, you could be hurting your chances at loan approval if for no other reason than you don’t have a realistic idea of how much loan you can afford.
If you start planning a big home but only have the borrowing power to accomplish a portion of your build-on-your-own-land ambitions, you may be forced to seriously reconsider your project. Get pre-approved for your construction loan first.
Ask How Long It Will Take To Get Permits And Other Required Paperwork
You can’t just hire a contractor, get a loan, and start working. You will need all proper licensure, permits, and other paperwork as required by the state or local authority. Loan approval is contingent on your having all required permits and meet any other needs as directed by state or local laws.
Learn More About VA, FHA, Or USDA One-Time Close / Single-Close Construction Loans Today
We have done extensive research on FHA, VA and USDA One-Time Close / Single-Close mortgage loans and spoke directly to the licensed lenders for most states. These are qualified mortgage loan officers who work for lenders that know the product well.
Each company has supplied us the guidelines for their product. If you are interested in being contacted by one licensed lender in your area, please respond to the below questions to save time. All information is treated confidentially.
Your response to firstname.lastname@example.org authorizes us to share your personal information with a licensed mortgage lender in your area to contact you.
Please note that the One-Time Close / Single-Close Construction Program only allows for single-family dwellings (1 unit) – and NOT for multifamily units (no duplexes, triplexes or fourplexes).
1. Send your first and last name, e-mail address, and contact telephone number.
2. Tell us the city and state of the proposed property.
3. Tell us your credit score and/or the Co-borrower’s credit score, if known. 620 is the minimum qualifying credit score for this product.
4. Are you or your spouse (Co-borrower) eligible veterans? If so, the down payment is $0 up to the maximum VA lending limit for your county. If not, the FHA down payment is 3.5% up to the maximum FHA lending limit for your county.