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Understanding Construction Loans In 2020
Written By: Travis Carter : Construction loans
Step 1 - Get Prequalified
Step 2 - Apply For a Construction Loan
Step 3 - Choose a Builder
Can I get a construction loan without a down payment?
What is the required down payment on a Construction loan?
Buying New Land
The three primary loan types available for new construction are FHA, Fannie Mae, USDA, and VA construction loans.
Construction Loan Inquiry
FHA Construction Loans
FHA construction loans are the most popularly used construction loans. FHA requires a 3.5% down payment and low interest rates. FHA requires an upfront mortgage insurance premium to be paid at closing. The mortgage insurance can be financed in the loan and will not result in additional out of pocket expenses.
FHA will allow 6% builder paid closing costs. If the construction contract is written to include builder paid closing costs, you will not need to pay for closing costs out of pocket.
VA Construction Loans
Conventional Construction Loans
Conventional construction loans are the most commonly offered construction loan program. Conventional loans require a larger down payment than the Government backed home loan options. Typically 20% down is required to close on a Conventional construction loan. Although the loan terms of a Conventional loan can be great, it is not a popular choice among first time home buyers.
The down payment on a Conventional loan is calculated like the FHA or VA home loan options. Gifted land and owned land can be used towards a down payment, however, if the value of the land does not exceed 20% of the total cost to build, you will be required to bring money to closing.
To contact us and discuss your construction loan options, give us a call at (518) 324-5544
WHat are the requirements for a construction loan?
The credit score required for a new construction loan is different than a standard home purchase. Most banks have “Overlays” that require a higher credit score beyond the loan programs minimum score requirements.
The Plattsburgh Mortgage team can finance a new construction loan with a credit score as low as 640. We offer construction loans in all 50 states. Our most common areas for new construction are South Carolina, North Carolina, Florida, Virginia, Maryland, Delaware, New Hampshire, Massachusetts, New York, Vermont, Maine, Pennsylvania, and Rhode Island.
Our lending team has intimate knowledge on constructing lending in your area.
The Construction Appraisal
How Long does it take to get approved for a Construction loan?
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