Financing the construction of a custom home from the ground up can be a headache. But wouldn’t it be a dream if you could secure financing that would let you build on your own lot for nothing down? While loans like this are not available everywhere, some mortgage lenders are offering one-time close construction loans where you can build on your own lot for 0% down. Even better, you only need a credit score of 650 to qualify! Read on to see how it works.
Equity and Collateral
Normally, construction loans can be risky for the lender simply because there isn’t any collateral—i.e. a finished home—to put on the line. As such, these loans usually require a large down payment, often as high as 20%.
However, if you own your own lot, you’ve built up some equity there that can be used as collateral. That equity can be used to secure the loan, making it lower risk for the lender and allowing you to start building without a massive down payment.
Benefits of the 0% Down, One-Time Close Construction Loan
The standard financing process for building a home can often require two loans: a construction loan for building, then a standard mortgage, to pay off the construction loan. This method requires two application processes, two closings, and two sets of closing costs. But with our 0% down one-time-close construction loan, not only you get the construction loan with nothing down, you get other benefits as well, including:
• One application process, which means less paperwork for you to fill out
• One closing process, so only one set of closing costs
• One fixed rate set right at the start, so payments won’t suddenly spike on you
If you own your own lot, there is no better way to finance your custom home!
Qualifying and Applying
Qualifying for one of these loans isn’t as difficult as you might expect. You only need a credit score of 650, which is comparatively low when it comes to construction loans. In addition, you (obviously) will need your own lot to build on.
To get the process started to build on your own lot for 0% down, contact Anna DeCamp at First United Mortgage today.