Home Construction Loans

Home construction loans have become very popular with the housing shortage across the country. However, not all mortgage lenders offer competitive home construction loans with affordable mortgage rates for people with all types of credit.

Shop and Compare Home Construction Loan Opportunities

home construction loanHome construction can be a daunting and costly project that can add a lot of turmoil to your life if you are unprepared.

The financing aspect of home construction is one of the biggest hurdles, so do yourself a favor and align yourself with a lender that specializes in residential financing. Add value to your home, both monetarily and aesthetically.

What is a Home Construction Loan?

Home construction loans provide financing for the entire process of building a residential property, starting from purchasing the land to completing the structure. Two common types include the standalone construction loan, typically a short-term option with a term of around a year, solely covering the construction phase, and the construction-to-permanent loan, which transitions into a mortgage upon completion of construction. Borrowers often secure a separate mortgage to settle the standalone construction loan once the principal becomes due.

  • Construction loans, short-term financing options utilized for constructing a new residence, can sometimes transition into mortgages once the home is completed.
  • These construction loans generally impose stricter eligibility requirements compared to conventional mortgages for pre-existing properties.

How to Manage Building a House while Making Mortgage Payments

How to fund a home construction project alongside an existing mortgage:

  • Steer clear of acquiring a conventional mortgage independently.
  • Choose a construction-to-permanent loan instead.
  • Select a mortgage lender specializing in home construction financing.
  • Identify the most suitable loan option for your home construction.
  • Choose an all-inclusive solution for a seamless process.

Is it easier to get approved for a construction loan than a traditional mortgage?

Generally, qualifying for a construction loan is more challenging compared to securing a conventional mortgage. Most banks and lenders mandate a credit score of at least 680, surpassing the requirements for conventional, VA, and FHA loans.

Is it smart to get a home construction loan?

If you’re contemplating property investment for home construction or significant renovation, seeking a construction loan could be advantageous. However, it’s prudent to carefully assess these advantages and disadvantages in alignment with your requirements, and consult with a seasoned lender to explore your alternatives. If you have below average credit or have a difficult time documenting your income, consider hard lending money options.

Most home construction loans are fundamentally temporary, intended to finance the duration of home construction, which typically lasts between 12 to 18 months, aligning with the estimated timeline for completing a standard construction project. As construction nears completion, borrowers have the opportunity to transition these construction loans into conventional mortgage loans. Throughout the construction phase, the financial dynamics are distinct: borrowers do not have fixed monthly payments; instead, payment amounts fluctuate in response to the evolving monthly construction costs.

Take a look at the home construction loans offered from Home Equity Mart for financing new homes and vacation properties. Finance your home construction projects!
Home Equity Mart is a national leader for 2nd mortgage programs, HELOC credit line and home construction finance options, and we can help you get a free Home Loan Quote today!
Let us help you find the right financing solution for building your new home while reduced interest rates are still available.

Home Equity Mart celebrates your visions and we want to turn your building dreams into a reality that you will be able to enjoy for many years to come.