Mortgage for New Construction

[Anonymous]

There is a neighborhood in our area that has a lot of home sites and they are already assigned to a builder. If we decided to go to the builder to ask them to build one of their floorplans on the lot how does that work? Would we have to get a construction loan or would it be a typical mortgage? If a construction loan is needed are those harder to be approved for?

[mynameainttracy]

You have to see how the builder does it.  Ours had us get preapproval and give them a deposit. They build it and then we got the loan. This is pretty typical for new home developments that utilize a larger builder...kb homes, etc.

Some smaller builders can do this but the one that I tried to work with couldn't afford to carry another loan while we built. She already had a couple of spec homes that she was paying on and we would have to get a construction loan for her to build. The bank required 20% cash up front to do this.We couldn't afford that so we went back to the larger builder.

[Anonymous]

Thanks for the feedback! The 2 builders that own the lots in this neighborhood aren't national builders but are the largest builders in the area. I guess we will need to check with them to see if this is even a option because we will only have 3.5% to put down.

[mynameainttracy]

If they are big in your area they might carry the costs. There are a few here that are not national by any means but can afford to build for people.

I'd just give them a call. Should be a quick answer.