Construction Loan Requirements 2024 - HOW To Build Your OWN House!
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- Опубліковано 29 вер 2024
- You may be looking for a construction loan to start the process of building a house rather than buying in 2024. In this video, Nicole breaks down the differences between building and buying in 2024, construction loan requirements and what you can expect when building a house.
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Hi, I’m Nicole Nark, a full-time Realtor® at HomeWay Realty in Little Rock. I came to Little Rock with the love of my life, I am a proud Mom of two furbabies (Mini Schnauzer Mix and German Shepard), a Graduate of Communications from the University of Arkansas-Fayetteville and Honor Graduate of Arkansas Real Estate School in Little Rock.
I believe that home ownership lays the foundation for a life of financial security and freedom.
From building equity in a home, to the tax benefits it provides, buying a home is the most important financial decision most people make during their life. For this reason it is important to work with a professional who is committed to act as an advocate for you and your best interests.
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Disclaimer: The topics discussed, and ideas presented are Nicole Nark's opinions and presented for entertainment purposes only. Nicole Nark is a licensed Realtor with HomeWay Realty, but she is not advising or representing you in these videos. The information presented should not be construed as financial or legal advice. Always do your own due diligence.
I heard you guys loud & clear! 😅 Check out the Steps To Building your own home video now: ua-cam.com/video/3iWjZaLx-ZQ/v-deo.html
I'm a Loan Officer Assistant and you just explained that so beautifully. It is hard to find one-time close new construction loans and we are so lucky to be busy with business in this real estate market because we specialize in CP loans. Thank you for doing such a great job of introducing the options to buyers and investors.
I appreciate the kind words! Thanks for watching and being a part of the industry 🎉
Hi, I want to know is it possible that two friends take house loan from banks each one. And buy a land and start to build a building including 4 or 6 apartments, together. Is it possible?
Yes could you make a video on purchasing land? The ins and outs, what to look for zoning? Thanks!!! Also in particular building a barndominium on that land!!!
Thank you for this. We have the family land but I was clueless on where to start next for the build. Thanks again!
Happy to help! Let me know if you have any other questions, I'm happy to help!
I liked the video when you drove thru some rural areas.
What if you already own the land, could you apply for the construction loan as well??
We have 18 acres with a small house that we've outgrown, but we love the property and want to build a new home on it. Do you have any knowledge of how this might be achievable being as we have a mortgage already on this property. I can't find any information on this!
Great video. Thx
Their are to many restrictions on buyers, especially those who wish to build.which lead to where we are to day, with regards to being able to even owning a home.
I found my land and paid cash for my land and I put 20% on the house I wanted to build! So it wasn’t as bad! But yes this is good information!!!!!!!
That’s awesome!! ☺️
Since when are interest rates low? Starting Jan-2022 I've seen auto finance rates climb drastically; at least they've currently leveled off, but I have not seen rates start to come back down towards pre-Covid rates. In fact, pre-Covid the national prime rate was ~4.25% and now it is up to 7.75% Also, I did some inquiries on tier-1 mortgage rates; in mid-late 2021 they were ~3% on a 30-yr fixed and now are ~6%+
They're low compared to historical averages, even at 7%.
Thanks so much
Great video, yes, please break down the steps for us, thank you..(:
Thanks for watching! I have a steps to building video coming soon so be on the lookout! 👀
Sounds good, I am now a subscriber to your channel and am looking forward to it..(:@@NicoleNark
I love watching your videos because I have learned a lot from them. I'd love to see something about how to go about things in my situation. We have acreage with a mobile home on it and garages and its paid off. We want the mobile home gone but are living in it right now. We are thinking about building directly behind the mobile home a little ways away. But what should our first step be? Do you know anything about putting a prefab or manufactured house on a lot and the loans associated with those?
Thanks so much for watching Lizzy! If you want to go the prefab or manufactured route, I would advise meeting with a manufacturer of these homes as they typically have several loan options available.
@@NicoleNark Ty!
What part of AR do you cover? I'm looking to build there in Forest City, and Pine Bluff. Thanks
Please detailed video
Thank you for this video! Would love a step-by-step process from land to home.
I don’t know if this is a silly question but what about flooring, windows, landscaping, appliances, furniture, pool…etc…Can you roll all that into the construction loan? Thank you and great video 😊
Not a silly question at all! All of those items can be part of the construction loan. Essentially everything from dirt to livable home can be included!
@@NicoleNark that’s freaking awesome!! I just found your channel this morning…I’m doing research on construction loans because my Father just gifted me 2.5 acres here in Arizona and I would love nothing more than to build my dream home🥰 you’re so well informed and I’m looking forward to binge watching all your videos😆
@@brandylove17 thank you so much! Please let me know if you have any more questions ☺️
@@NicoleNark Thank you 🙏 😊
👏 can you list a few lenders that’s easy to work with & shows good approval ratings by others?
I don’t understand why you refinan+e? I thought building the home was so that you didn’t have a mortgage
What country/province?
What if you rely on the equity in your current mortgage to fund the upfront costs and down payment for a new build? Is the only option to sell your home early and live elsewhere (to get access to the equity) until the new build is ready?
You could do a cash-out refinance and pull out the equity for the upfront costs.
@@NicoleNark would that affect anything if we did that and then put it on the market 2-3 months later?
@@ashlynkaaay no. No penalty or issues with that.
hi! to clarify, are you saying that if I want to build a custom home, i not only have to pay for the actual cost to construct the house, but also pay for the imaginary value the city has assumed the house to be worth? please tell me im wrong on that.
or, is the "long-term financing" just a way to pay off the construction loan if it is not paid in the 6-18 months/duration of construction?
Long term financing is a way to pay off your construction loan and amortize your monthly payments over 20-30 years so they are lower if you wish to do so!
I have land …are there GC that are willing the have the owner the do a lot of the labor?
Maybe, I think it really depends on the relationship established between you and the GC. Make sure you are clear on that intention when discussing your project.
Question..So even though I'm still paying on my land I can use my as collateral if the value is higher for my 20% down payment
If your equity in the land is higher than the down payment required, yes.
Long term financing?
Yes a holding loan. If you are not building your home all cash, you will need a loan to hold the property. This will allow you to pay off your construction loan and will be the mortgage you pay on monthly after construction is complete.
I want to build to sell.
If you don’t have 150K saved you can’t get it,
Got it 😂
Ok y'all too cute. Subscribe
Please please please make the video regarding finding the land purchasing the land, finding a draftsman and builder. Start to finish please
You need a builder for that perspective. Maybe she could do an interview?
l think that you did a great job explaining how these loans work. Now how to find the land and he builder would be a great help for all of us looking into the dream of getting a piece of land and building our little c dream home.
Thanks for your excellent insights. !!
I couldn’t agree more with this comment!
Thanks for watching! ☺️ I’ll get to work on a video that covers more of the steps to building with some pro tips & warnings! If you have any specific questions, please comment them and I’ll work them in!
Oh do some work yourself..lol
Yes, I would like to see you do a more detailed and in-depth review of a new build from finding the land, home designs etc. I am currently researching this to start the process myself here in Florida. Thanks for all the great information that you share.
I'm doing this myself in Central Florida!
@@mic8952Did you get the land surveyed? Also where did you get the construction plans?
Thanks for watching! I’m happy to hear this video has been helpful and look toward to making a video covering more detailed info! If you have any specific questions or topics you want covered, let me know and I’ll incorporate them into the video 😊
I’m doing the same as well but being the developer
People buying land and planning on building a home with a basement, make sure you know what kind of soil you're building on. Can get real costly if basement foundation needs additional work due to bad ground.
You nailed it. Brought clarity to the process. The overall 20%, you example of already owning the land took me so long to figure out. Was worried about doing improvements before getting construction loan and not having enough down. Thanks, great info. Subscribed and will watch more of your content. Future video-building plans, requirements and customization costs.
Glad you found this video helpful! Be on the lookout for more soon! 👀
I just got my CO on my first construction project and you hit all the points right on the money. I did the one time close loan where I bought the land cash beforehand.
Amazing! Congratulations on your build! Do you plan to keep building?
@@NicoleNark absolutely! I’m already applying for an equity line to use that money for the next project.
That is a great strategy! @@tony97gt
@tony97gt how was the interest looking like?
@@handymanjeff 4.5% ARM for 5 years
GREAT Info! Thanks. My son has a 3 acre agricultural property in VA and wants to build a medium size timber-frame house. I will help and want to serve as our own contractor, since I ran a construction company and have ability to everything. The property is mostly paid off and he won't need more than 70k on high-side to complete the house. I want to get him started in life with little to no debt, and that's why I am so eager to get this done. He has a BA and works for the University, but not making too much yet. Is all this realistic? Thanks!
Sounds super realistic to me but will likely cost more like 100k
Don’t know prices in Virginia but I assume they are as high or close to where I am (Flagstaff)
We are running somewhere between $203-$248 a SF to build rn straight costs including impact fees and permits, etc… we just finished a 2600 sf and the final cost to build was about $590k so about $226 bucks a sf. (I am a builder)
@@freeabo7836That sounds about right. I live in Tucson and am in the process of buying a piece of land after unsuccessful searching for a proper existing home. Do you have any recommendations for builders in the Tucson area? Thanks!
Thank you so much for tuning in to this video! Your support means the world to me. 🥰 I’d love to hear what questions you'd like me to cover in future home building videos. Please feel free to share your ideas in the comments below. 👇🏻Your input helps me create content that's valuable to you!
My son and I own two acres with a house already on it. He plans to build a small 800-1000 square foot house on the land. We have a conventional mortgage on the property now, with about $80,000 in equity. Would he need to get a construction loan to build his house? Or do you think a personal loan using our current property as collateral would be better? He has about $30,000 saved to start the build.
I have half of building funds and my land purchase, however I want to be the general contractor, would that be a problem. yes I have building plans too.
You'd be fine. Go for it.
Do you have a spread sheet to the break down of items in building a house. mI have the land and doing the engineering plans to get a permit. I want the steps from permit to occupancy permit. Thanks
Yes please, specific steps on the process would be helpful. Especially the timeframe. It seems like the approval for construction to permanent would be so extensive that it would be better to have the land purchased already so as not to delay the closing of the land purchase. Could you elaborate more on the steps for when you don't have the land and you plan to have a one time closing for land, construction and the mortgate?
Absolutely! More build content coming soon 😊
I own 10 acres of land with a pole barn on my property for storage and electrical power to my pole barn.
I have my blueprints for a house.
Can you buy rural land and a new modular home with one USDA guaranteed loan since contractors have to work on the modular home.
Yes
Yes, I would like to see you do a more detailed and in-depth review of a new build from finding the land, home designs etc.
My experience showed me that the some painting, maybe one bathroom not done will get you a CO, being said that you, the owner can paint a few rooms. I also know that beauty doesn't mean a higher value. I was in construction for 20 plus years.
Thanks so much for this video! Please do a more detailed video on how to purchase the lot and so forth. Thanks!
First off thank you so much for doing this for people! You are truly the shining of star of your family!!! God bless you🙏🤙🏼 I am a mother of 5 work at the local gas Station and my husband watches kids right now. I am lower income and on food stamps. We own the land we are on now but have a property we are currently under finance for with 6 years left. I have opened permits with state to build a home have all documents but do not have money to buy lumber and so forth. We are under owner builder permits! What should I do! Cherie in Hawai’i ,
Thank you. I'm about to pursue building a custom home
Please breakdown the steps, thank you!
Just came across this great video. Very great information you gave out. You have a new subscriber keep the great information coming.
Glad it was helpful! Thanks for subscribing as well 😁
“How to Build Your OWN House” should have been titled, “How to Get a Bank to Pay Other People to Build a House for You”. 🤣
Good idea! I might change it
from 6 to 18 months is most likely a loan for very wealthy people, and, unfortunately, the term does not come much longer. And why do they not give a mortgage for building a house? I do not like traditional traditional birdhouses, I want to build my own house with my architect, who will make this house for less money ... in general, everything is not for people.
if a house construction costs $300,000 but a person only has $100,000 in an account, can the person getting the loan ask to only borrow up to a point, pay that down, then hold borrowing for a few years to get enough money to borrow the rest, to continue construction? or does the bank want the house fully completed all within the year?
No banks will let their investments sit for years unfinished. Think about it? What if something happens to you? How will they sell an unfinished house to recover their money?
Can speak more about how to obtain a construction loan and be the owner builder for a primary residence? Also, let us know who can finance these types of loans for owner GCS? Thank you
And how does one find a contractor that doesn't want to be paid up front ugh
Easy
Negotiate a fair price and pay them in milestones not by labor hour. Check in on progress regularly to ensure quality. Reuse the contractors that have high quality workmanship for other building projects and referrals. Cheaper, high quality, they eat, you eat.
I had a house that was Buren down, I didn't have mortgage. They demolished it. Now in order to pay a builder , how should I make contract, to pay step by step, like for foundation, for plumbing, for framing, electrical and so on.....and how much has to pay per square foot. That is very important for me to know. I need to know how much it cost me for 2400 square feet in GA. I appreciate if you answer me.
Could you talk about a spouse buying a house from her husband without going through a divorce is there a LAW prevent as from doing this.
Hi Nicole, trying to get a construction loan. I own my own lot. can you explain how the bank uses the lot to help with finance.
I have a starter home that I live in . I still owe a small amount on it. How much would 350000 home down payment in the year 2024?
Thank you so much for this video. I own my own land and plan to start building my retirement home and this information helped me decide just wait a couple more years and use my retirement account since I don’t want to pay a higher or any interest for that matter. Also, I would love to see a video on choosing the best contractor and your thoughts on project management. My entire career is project management in the complex field of healthcare, so can I do this in regards to building my home and can I forego a contractor and subcontract myself? Thank you Nicole and just subscribed to catch your future videos so I will be looking for more great content!!!
Can you use the FHA construction loan with buying land and putting a manufactured home on it?
I thoroughly enjoyed the video. Thank you!
Nicole, do you do Construction Loans in TX? I bought a lot in an acreage community outright almost a year ago and i am my own builder with my company planning on building on it.
Already have plans, takeoffs, suppliers and tradesman.
Would love to chat.
Please do a video with new construction loan on land you own.
A construction loan is a no go for me as the bank sent me a list of requirements that I will not comply with. I currently live in AZ and recently retired to build my retirement home in Hawaii. I've owned my lot for approx. 8 years and its been paid off for years now.
1) I retired at 55 and am financially secure, post-tax cash on-hand as well as my 401K which I am eligible to withdraw from (without penalty) is readily available to make monthly payments. I have a set budget for rent or a mortgage as part of my plan yet the banks want me to have a withdrawal amount set in writing from my fund mgr. (in my case of ~$10K/month). That ain't gonna happen as I'm not ready to pull from my 401K like that yet. The after tax cash I have (nearly 50% of my portfolio) means nothing to them as they think I'll spend it on hookers, drugs and gambling (meaning its not guaranteed income even although my wife and I spent our lives planning and saving for this day).
2) The banks require that I have a licensed Contractor/builder be in charge of the build and that I employ a licensed Architect. This will add ~$100K -$150K to my build unnecessarily as I've been in industrial construction mgt for 10+ years and have a Stanford Certified Advanced Project Management credential so I will be my own owner-builder which would take the place of a licensed contractor. I can manage the sub-contractors (including all the PE requirements) in order to ensure a quality build, efficiency and budget control... The banks require that for me to be an owner-builder, 75% of my income (I'm retired remember) must be from a construction trade (meaning I have to be in the construction side of the business which I am not but I do have an engineering degree) so again, that's a no-go... not to mention another issue is I've contracted a buddy of mine who's been working on my house plans/pkg part time for several months now is a non-licensed Architect with over 200 custom homes on his resume in CA and AZ yet they won't accept a drawing package from his LLC.
There are numerous other requirements but thats the big stuff... so now, I'll be paying cash to build my home which will pretty much break my retirement plan as it stands. I could get a cash-out refi when I'm done to replenish the coffers or am thinking about going back to work after I'm done in a year or two but am not there yet. Its a lot more complicated than a lot of the comments I've read through on this thread. Bottom line is if you want a construction loan, you have to have the income to qualify, 20% down and hire a licensed builder to do the work as the banks are trying to protect their investment. I totally get that but there's no real appeal process to go through, its black or white to them... at least that's my experience with banks in Hawaii.
Are you familiar with the same process, but for building in AZ?
@@MrChoquito40 Sorry, no... I've had 3 homes built in AZ over the last 30 years but always went through builders (Pulte, Beazer, Stan Pac) as I worked full time (60+ hr work weeks) and never thought of being an owner-builder until now that I'm retired. To add some background on my Designer (Arch), I've used him to add an extension to one of my homes and he also designed a custom home for my best friend who did get a construction loan so that aspect in AZ seems to be no problem (at least 10 yrs ago) but a lot has changed since then so best to contact some banks and ask for their requirements. Keep in mind, the county of Hawaii doesn't have the restrictions I mentioned above, those were bank requirements to get a construction loan. Good luck.
@@azwileetoyote I would love to get in touch with your designer/architect friend for a set of a plans here in California.
thank you for that wonderfully explanation ... quick question can i present my own drawn home plnas?
How about a prefab home if you own the land already ?? How does this work ??
Wow. Great information...thank you.
Can you tell us about home equity line of credit (HELOC) and how it works and if it is better than any construction loan.
Yes! Are you talking about taking out a HELOC on your current home and using it to build?
Yes, I would like to use SB9 and build two rental units of approx. 1000 sqft each on my lot which is about 11,000 sqft in Long Bch. Thank you..(: @@NicoleNark
These videos (not because of you personally) are so discouraging. Its like...Hey! You wanna build a house? Not so fast! Here's an incredibly confusing, convoluted, and expensive obstacle course you have to do first. Then hopefully nothing goes wrong for you broke a$$holes. lol. The info is greatly appreciated. And we, as your followers, appreciate it. But DAMN...WHAT DEMON CAME UP WITH THIS SYSTEM?!
I agree, the process is so unnecessarily complicated! If you have any suggestions on how I can make my presentation of the info easier to understand, I’m always open to suggestions!
So buying the land first make it easier? & cheaper
prefab modular homes ( read not mobile) can eliminate lots of labor time over stick built and save lots of money
This was an extremely informative video! Thank you - on to devour the rest of your informative content
Hello! We have 6 acres, we have a steel framed home that we are in the process of putting up right now. A this point is it possible get a contractor loan ?
Yes.
Can you do this with USDA?
USDA Construction loans exist, but are hard to come by. Few lenders do them. A lot of requirements. Would be the way to go though!
A video going more in depth would be great if already a video out plz disregard ❤
Hi. Thank you for this great info. Question: My construction loan is gonna be around $600k. Can I sell one of my investments properties and 1031 it into my construction loan as my down payment ? Or in other words say I get $200k profit for the sell of my property and then only take a $400k construction loan plus my $200k for a total of $600k. So 1031 $200k as part of my $600k. And then have this my investment property. Thank you
From my understanding, when doing a 1031 exchange your new build would need to be completed within 180 days of the sale of your investment property. Because of that time constraint, using the 1031 funds for the downpayment could be difficult. I’d advise talking with an accountant or tax attorney to explore the possibilities there!
Hi Nichole, yes, it would be beneficial to go through the steps of building process from start to finish and finding a builder and a floor plan and thank you for the info is very informative
The steps to building video is up!
Thank you for the information. This is absolutely helpful.
Glad it was helpful!
If you own the land free and clear, does that factor into the down payment? Like suppose I have land valued at $100k and it will cost $400k to build a house on it after which the whole property will be worth $500k. Does that land count as a down payment or would you have to put up 20% of the actual loan?
You can use the land as collateral for the downpayment since you own it free and clear!
How might this change if you apready own the land?
Please, make the video about construction steps
Can retired couples get new build loans from lenders?
Absolutely!
Yes please make that video!!!
Hey 💜
Im new to a lot of this. Just so I'm clear; this video is not for new construction home sites? Like places that have lamd for new construction homes?
This os for if I can was going to buy a lot and go from there?
Go through all this to get the $$$, & your contractor takes a huge down payment & bounces...
Be careful....
Contractors that require money up front as a deposit are a red flag! 🚩 we don’t work with them!
Question... for the 2 time close option, is there a way to structure it to where the refinance would be high enough to cover your down payment so you are only left with monthly mortgage payments?
Yes. When you build, you should have enough equity upon completion to allow you to avoid a down payment.
Can the construction loan be used to build a home and a pole barn at the same time?
If i have the Build being my friend, can i do a bigger plan then i lower down the plan so i can have my downpayment “back”
Keep in mind, if you are using a construction loan the house plans will be appraised to determine your loan amount. When those are submitted to the lender and the lender gives you the funds, they are expecting you to build the house that is on the plans.
I'm confused. It seems like with method 2, you're having two different house payments?
Not simultaneously. The first loan would likely be interest only while you are building. After construction is complete, you’d get a mortgage just like one if you were to purchase a resale home. That mortgage will pay off your construction loan and take its place.
This was really helpful. Thank you
Did you ever do a video of the process from start to finish?
Paying cash you don't need any of your milestones
Correct, if you plan to pay cash there wouldn't be a need for the construction loans discussed in the video.
Would love if you break down steps.
Building our first family compound, so excited and this video was so informative! Thank you 😊
Glad it was helpful! Best of luck with your family compound 🥰
Family compound?? Like multiple apartments or something?
Need help ,with construction loan
Very well explained. Thank you.
You are welcome!
Why is the process so long in the process and why are every thing back log
Construction takes a good 4 months if EVERYTHING stays on track. That means no material delays, no contractor or weather issues, etc. With COVID, many supplies became back ordered and now take several weeks to arrive. When we built, it took 5 months alone to get our windows! The process is becoming faster again but 4-6 months is still very common.
Great info
Very informative video, thank you. I have a question on VA loans. I’m curious if you can use a VA Construction Loan to purchase a lot, even though we currently have a VA Loan w/our Wyoming home but do not intend on selling it for at least 2 more years. According to my research, the VA states that you can use a VA Construction Loan to buy property and a home ONLY if you intend to build right away (the VA does not define "right away"). So, in our case, we live in Wyoming. We purchased it with a VA conventional loan, and do not plan to sell for a few more years. However, we plan on buying property/lot (also in Wyoming) within the next 90 days but have no intention of building "right away" (we will build 3 years from now, after we sell our current home). So, can we use a VA Construction Loan to purchase the property, and 3 years from now build a new home on that property? Meanwhile, we are maintaining our current home (w/the existing VA home loan). I hope that makes sense. Thank you.
Great Information please give us a step by step process
The steps to building video is up! 🎉
Hi, thank you for the time and energy to create this video that is easy to follow. Question: What if I have a floor plan already what would be my first step to find out how much it will cost to build the house. Should I go to an architectural firm or a Home building company in the area?