Understanding construction loan requirements early can be helpful. Maybe you just made an offer on a lot, or you have plans in hand for a property you already own. Or maybe you’re just exploring your options! No matter where you are in the new construction process, there are a few requirements you can expect for any construction mortgage:
Home Construction Loan Requirements for You, the Borrower
You will need to meet certain minimum credit score and income requirements for new construction loans. These benchmarks are set by your lender – your loan officer will be able to give you the most up-to-date requirements. You may also be required to put down a down payment of 20% or 25% of the loan amount.
If you are concerned you may not qualify, consider speaking with a construction loan specialist at The Federal Savings Bank. They are best equipped to help you understand your loan options and can even help you build a plan to raise your credit score. This might take some time, but when they’re holding the keys to their dream home, many borrowers feel it’s worth the wait.
New Construction Loan Requirements for Your Builder
If you are working with a builder (rather than building your home yourself), there are a few requirements for new construction loans that the builder will need to meet. When you apply for your mortgage, you will need to submit an executed (signed) copy of your agreement with the builder. You will also want to provide your lender with a signed contract to purchase the land, if you don’t own it already.
For their part, the builder will submit detailed plans for your home, as well as their license to build, and proof of insurance. Depending on the project, your lender might ask for the builder’s financials as well. If you are approved for a construction loan, the lender will disburse the funds directly to the builder over the course of the construction period.
The right loan officer knows it’s their job to guide you as you gather everything you need for your mortgage. When you call 877-788-3520, you will be matched with a construction loan specialist at The Federal Savings Bank, who can help you build a plan for financing your new home and answer any questions you have about the process. They can also help you evaluate your options for low-cost FHA and VA new construction loans. When it comes to your family’s home, there’s no need to settle if you don’t have to.
Subject to credit approval. Terms and conditions may apply. Subject to VA eligibility requirements. Property insurance is required on all loans secured by property.