A guide to owner builder construction loans

Real Estate | 19 Aug |

Owning your own home is said to be the seemingly elusive American dream, but the dream can be real for you regardless of your situation. Some Americans dream of maintaining legacy homes that have been in the family for hundreds of years, and some Americans dream of building their own legacy from the ground up in a new home build.

That dream is real for over one million Americans. The National Association of Home Builders reports there were 1.3 million new privately-owned housing units offered in the United States in 2018.

Start dreaming of pouring your own cement after learning all you need to know about owner builder construction loans right here.

Are Owner Builder Construction Loans Mortgages?

The quick answer to this very common question is no. When you are dreaming of building your own home, you will learn this early in the process.

To build and live in your own home, you will get a total of two loans. You will likely need to go through the bank to get them, but some construction companies offer their own forms of financing.

Some will even cover your mortgage as well and have you paying them for the next 20 years instead of a bank.

But for the most part, you will get two loans. One will be for the construction of the home and be received through a period of draws for the builder.

The second loan will be what is called the “end loan” and will be the conventional financing you would get when purchasing any home, such as a 20 or 30-year mortgage.

You will go through a separate qualifying process for each loan.

Whether you have good credit, bad credit, or a complex time proving income, there is construction loan(s) for you.

Finance the Dream in These Easy 5 Steps

Now that you know the basics of the owner builder construction loan process, follow these easy steps from loan applications to moving day.

First, you will do your research on home builders. When you apply to the bank for the loan, they will want to know every detail about every nook and cranny in your new home, and who is building it.

You want licensed contractors with experience.

The second step is to apply for the construction loan. Be sure you have all of your financial information available.

For complex situations, have three to six months of bank statements available. All your lender wants to see is that you have money in the bank. A stash in savings is helpful.

Once this is approved, the third step is to build the house. The construction loan will go to the builder in a series of “draws” or installments.

Each draw is received after a certain step in the build occurs, such as the foundation pouring. You and your lender will negotiate this with your builder.

Fourthly, once the home is built, the next step is to get your mortgage. After that, it’s step number five – falling asleep in your brand new dream home to the scent of fresh paint.

Begin Planning Your Dream Home Today

Over one million brand new homes are built in the United States every year. Due to advances in technology and awareness, today’s new home builds are also built to higher standards than they ever have been in history.

Before 1970 for example, energy efficiency requirements in new homes simply did not even exist. Today, every state but California is using the universal International Energy Conservation Code in new home builds.

That’s why today’s new home builds take longer than they have in history. It is to ensure your dream is built properly and to last, from the ground up. Millions do this every year, but you don’t need millions to get the ball rolling.

Join the millions of Americans today that are planning their dream homes from the ground up, so that you can build the best quality home for their family’s legacy today. Discover how easy it is to apply for and get, new owner builder construction loans in Arizona right here on our site.

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