While 99% of the lender out there will tell you that you need 25% down to build a new home, this just is not the case. I work with a local lender and builder who can get you 100% financing on a newly constructed home.
Why aren't banks lending on new construction? Simply put the companies that provide private mortgage insurance (PMI) will not touch a new construction project. I have to attribute this to the number of foreclosures out there. A similar thing is happening with condo sales.
Despite the sharp decline in the number of lenders out there who offer low down construction financing, it can be found. Typically you will need to have a good credit with a score over 660 (as of this posting). In addition if you are turned down for conventional financing you may be eligible for Rural Development (RD Direct) financing.
RD still offers $0 down financing at competitive rates (in or around 5%). Some subsidized rates may be as low as 1%. Keep in mind that you have to be low income but for those who qualify this is a great program as well.
You can find information on RD financing at http://www.rurdev.usda.gov/mi/sfh/sfhmain.htm or feel free to contact me at 231-218-5199 for information on building a home in the Grand Traverse area.
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