It’s hard to find the perfect home that’s built to your preference. The idea of being able to build your dream house and customize it to match your needs is appealing. But before you start building your ideal home, you might need to apply for a loan to help you cover the costs. Here’s where a new construction loan comes into the picture. Find out how you can get a new construction loan to turn your dream house into a reality.
What is a New Construction Loan
There are various types of home building loans, one of them being a new construction loan. This type of loan deals with ground-up builds and helps to finance the construction costs of your home. Once you secure this financing, you can freely customize your house to include everything you ever wanted. In order for that to happen, you first have to make sure all the necessary paperwork is in place.
Aggregate the Necessary Documentation
When you make an application for a new construction loan, the loan underwriter will analyze your credit history and real estate investing experience to determine your eligibility, the terms, and how much you can borrow. To ensure you qualify for a new construction loan, make sure you have all the documentation, including:
- Valid government issued photo ID
- HUD statements from any real estate investment properties you haveowned
- Personal financial statement
- Purchase contract for the land
- Construction budget
- Entity documents for the entity you shall use to borrower money
Downpayment and Strong Credit Requirements
New construction loans are considered high-risk loans. You will need strong credit and real estate investing experience. The down payment for new construction loans can be higher – exact amount would be based on the cost of the land and construction costs.
A lender will also want to your exit plan – do you plan to sell the property once built, or refinance it.
Contractor Credentials
Your lender will also review the license and construction experience of your contractor. This may include getting the contractor to provide a list of previous builds they have completed along with a copy of invoices and completion photos to back the quality of work they completed. Your lender may also request to see the contractor’s proof of insurance as well as professional licenses. In addition, the contractor or you will needs to submit construction plans and approved permits (if any). This is necessary for the home appraiser to review and compare them against similar properties in order to evaluate the value of the completed home.
Apply for New Construction Loans at InstaLend At InstaLend, we offer new construction loans to help homeowners build the property they always wanted. We offer a fast and easy application and approval process to help borrowers get the funding they need. Our minimum loan amount is $50,000+ for a term of 12 months for single-family properties that range from one to four units. Need more information? Contact our knowledgeable experts to guide you in the loan application process.
