What Kind of Down Payment is Required for a Construction Loan?

By
Home Builder with Stanton Homes - New Home Builder

Ask the Financing Expert Series: "Ask Brian"

What Kind of Down Payment is Required?  

Construction Loan Down Payments

What Kind of Down Payment is Required | Construction LoansBrian Liable, Sr Loan Officer, and Primary Residential Mortgage, answers your home financing questions.

Custom" doesn't have to mean "expensive" when it comes to building a new home. 

From the construction loan to permanent financing, find out everything you need to know. 

Raleigh new home builders like Stanton Homes can help hook you up with all the details you need, with frank answers to blunt questions like these, in our "Ask the Expert" column:

Today's question:

"What Is a Typical Construction Loan Down Payment or Deposit?"

Brian answers:

What kind of down payment is required to build a custom home?  I hear this question quite often, and here's how I answer it:

Get Pre-qualified

Before shopping for a builder, get pre-qualified for your mortgage.   A pre-qualification will give a good idea of how much you can spend on your new custom home.

What Kind of Down Payment Will I Need?

This is a tough question, because builders' requirements can differ.  A general guideline for your equity investment is 20%-30% of the cost of the home.  Many of the major lenders and builders want to see "skin in the game".  But with the right combination of lender and builder, the out of pocket expenses can be greatly reduced.

 Along with your investment into the equity of the home, you will incur closing costs for the permanent and construction loan closing - typically in the range of 2.5%-3% of the loan amount.

 Is it possible to Lower the Financing Cost of my New Custom Home?

One way to save money building your new home is to put the construction loan in your name instead of the builder's name.  With this process, you will be required to make monthly payments (interest only) on the construction loan, for money that you have used.  That means the builder received draws as each stage of the home is completed and inspected.  There may be an additional upside for the homebuyer, as interest expenses can be tax write offs.

Are Lower Down Payment Options available for new custom homes?

At our company, we have worked out a new construction/permanent financing arrangement where buyers are able to put as little as 25% of the lot price as a down payment, plus $5000 for project start up, as opposed to 20%-30% of the entire project cost.

What is a Typical Deposit for a Custom Home Builder? 

I work with a lot of great builders and each has their own minimum deposit requirement.  Stanton Homes, a custom home builder in Raleigh NC, only requires a $5000 deposit on most new custom homes. 

Ask your builder about down payment and investment requirements before you start your home building process.

Options are also available to recoup some of your new home investment.  Ask me how.

Call Brian at 919-256-3133 for more details.

Ask the Financing Expert Series

Stanton Homes continues to offer the information you're looking for.  Check back for more construction home loan and other financing questions from our new "Ask the Expert" column, where Brian Laible, Senior Loan Officer for Primary Residential Mortgage, will answer financial questions like "What type of down payment is required?" and "Are one time close products available?"  

Send us YOUR questions to "Ask Brian", and look to Stanton Homes for the answers you need.

What Kind of Down Payment is Required | Construction LoansBrian Laible - Ask Brian!

Sr. Loan Officer, Primary Residential Mortgage

701 Exposition Place, Suite 118, Raleigh, North Carolina 27615

919.256.3133

*Stanton Homes is not a lender, not offering lending advice, and is not affiliated with Primary Residential Mortgage.  For answers to lending questions, contact a trusted lender.

Posted by

 

 

New Custom Homes in the Raleigh Area - and throughout central North Carolina

 

New Homes Raleigh NC - New Home Raleigh - Raleigh NC New Homes - New Home Raleigh NCStanton Homes makes building your new custom home easy!  We'll guide you through the entire process.  Your custom home is going to be extraordinary when you create it with one of the nation’s top fully involved builders and the high quality materials and craftsmanship that our reputation is built on. View available homes here.

Call 919-278-8070 to find out more about new homes in the Raleigh area. 

Top 10 Best Floor Plans      
Articles copyright Stanton Homes 2006-2018.  Unauthorized use is not permitted.  Provided for informational purposes only, no claims are made by Stanton Homes regarding the validity of any statements.  Please note:  all listing information per MLS, and current as of posting date.  Information subject to change.  Stanton Homes does not make claims to ownership of  any lot listings, but can work with homebuyers to purchase available lots and build.  Home plans to be approved on an individual basis, subject to neighborhood restrictive covenants and lot restrictions.  Ask for further information regarding any community, lot or floor plan.  Photos represent typical homes and details of each neighborhood, to help highlight different options available in the Raleigh/Triangle area.  No claim of ownership is made to homes or land pictured.  

Save

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Lending / Financial
Location:
North Carolina Wake County Raleigh
Groups:
North Carolina Real Estate
Realtors®
1st Time Buyers
Fort Bragg NC Relocation
Tags:
construction financing
custom homes
down payments
construction to perm programs
raleigh new home builders
construction home loans

Spam prevention

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Ambassador
517,389

Stanton Homes

Design/Build Custom Home Builder in North Carolina
Ask your Custom Home questions here!
*
*
*
*
Spam prevention

Additional Information