@Anonymous wrote:
My husaband and I are working on our credit and saving in hopes of purchasing a home in the next 6-8 months. We would prefer to build something new but open to buying something already built. My question is, is it any easier to get a loan through the builder for a new construction?
Short answer: No.
Lenders have to follow guidelines. The guidelines they follow are either Freddie Mac or Fannie Mae or those guidelines for government loans (FHA, VA or USDA).
In addition to the guidelines above, many lenders have their own overlays that are more restrictive than any of the guidelines for Fannie or Freddie or government loans. For example, I know that the max back end ratio (total debt ratio) for FHA is 56.99% of your gross income. There are many lenders that restrict the max total debt ratio to 50% rather than allow the full 56.99%. Most of the time this doesn't affect the buyer/borrower, however, sometimes it does affect the amount you can purchase. That is just one example I see frequently. There are many other different types of overlays.
Builders don't issue mortgage loans. Lenders issue mortgage loans.
In addition to that, builders charge top, top dollar for their homes. You are paying more per square foot + paying a huge premium for any extras. Even when the builder "gives incentives" you are paying for it.
I do sell new homes too, but there is no question that in most markets a resale is better value. The sweet spot between new and resale are those homes in the newly built community where there are sellers that have purchased from the builder new but have to move away for one reason or another so you are getting a home in the 1-3 year old range with all the goodies but paying less than what the builder charges for new construction. You also have a wider variety of loan programs that will work with a resale that is one year old or older.
