New Construction Loans

About New Construction Loans

If you want to build your dream home from the ground up, we've got you covered. These loans provide the funds needed to purchase land and cover construction costs, all within one streamlined financing package. These loans can be handled in one of two ways: a one-time close construction loan or a two-time close construction loan. Both have their pros and cons and we can help you determine the best option for you.

New construction loans offer flexibility in payment schedules and are ideal for borrowers who want to design and build their dream home from the ground up. As your home is being built, funds are advanced according to a draw schedule that you and your builder agree upon. Beacuse of this, you will pay interest only on the amount that is drawn on the loan.

Get more information about the home buying process

Some Key Renovation Loan Characteristics

Construction-to-Permanent Option: Combines the construction loan and long-term mortgage into a single loan, eliminating the need for refinancing after construction.
Interest-Only Payments During Construction: Borrowers pay only the interest on funds disbursed during the construction phase.
Draw-Based Funding: Loan funds are released in stages as each phase of construction is completed.
Customizable Loan Amounts: Tailored to include land purchase, construction costs, and related expenses.
Flexible Terms: Options for fixed or adjustable-rate mortgages upon completion.
One-Time Closing: Saves time and reduces closing costs by consolidating construction and mortgage financing.

Considerations for Borrowers

Project Scope: A detailed construction plan, timeline, and budget from a licensed builder or contractor are required.
Land Purchase: Loans can include funds for purchasing land, but the land must meet lender guidelines.
Loan Costs: Includes construction-related fees, such as inspections and appraisals during the building process.
Risk Management: Borrowers are responsible for managing unforeseen delays or cost overruns during construction.
Builder Requirements: A licensed and approved builder is required to oversee the construction.

New Construction Loan Qualifying

Construction loans follow the guidelines of the underlying loan program:

Credit Score: Minimum credit score requirements typically range from 620 to 680, depending on the lender.
Down Payment: Down payments can range from 0% to 20%, depending on the loan program.
Debt-to-Income Ratio (DTI): Borrowers should have a manageable DTI, usually below 43%, to qualify.
Income Verification: Steady employment and consistent income are essential for approval.
Appraisal: The loan amount is based on the home’s projected value upon completion, verified by an appraisal.

New construction loans provide the resources and flexibility to bring your vision of a dream home to life. Whether you’re purchasing land or starting construction, we’re here to guide you through every step of the process. Contact us today to explore your options and get started! Reach out to our team at (210) 987-8943. We are happy to answer your questions and would love to work with you!

This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply.

Corporate | NMLS ID NMLS# 1660690 | Corporate Address : 3100 W Ray Road #201 Office #209 Chandler, AZ 85226

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