FAQs
Can I use my land as a downpayment for a construction loan?
Construction lenders normally require the borrower to make a down payment of 20 percent of the loan amount. ... If you own the land where the house will be built, you can use it as equity to secure the loan in lieu of a cash down payment.
What is a good credit score to get a construction loan?
Loan companies have specific credit requirements, and the higher your credit score, the better. You should aim for a credit score of at least 680 or higher if you need a construction loan.
What happens when you go over budget on construction loan?
Once your home is complete, the construction loan converts to a regular mortgage. There is no additional approval process or closing costs. ... If your project goes over budget, you'll need to come up with the difference out of pocket or take out a second loan to cover the overages.
How long does it take to build a house from start to finish?
The building process of a personalized production home usually takes between three and four months to reach completion; however, it can sometimes take up to six months, depending on the weather, construction supply delays and any requested customer design changes that are implemented along the way.
How does my credit rating affect my home loan interest rate?
The way you've handled your finances in the past can help predict how you may do so in the future, so lenders will consider your credit rating when you apply for a mortgage or other loan. A higher credit score may help you qualify for better mortgage interest rate, and some lenders may lower their down payment requirement for a new home loan if you have a high credit score.
How does a construction to permanent loan work?
A construction-to-permanent loan combines two loans into a single one. The money to build the house is advanced in stages to the contractors as construction progresses and the balance of the loan becomes a permanent mortgage once the project is completed and the homeowner moves in.