Shawn Kaplan

A construction loan is a short-term mortgage to build a home. There are different types and variations, but to make it as simple to understand as possible, you take out a construction loan when you want to build rather than buy a home. The funds from a construction loan cover the construction costs for the house and any permanent fixtures, including land, labor, materials, and services like construction plans and permits, etc.

With construction loans, the builder provides an estimate of construction costs and a project timeline prior to loan closing. Your lender manages your payments (called draws) directly to the builder as construction moves forward. Once construction is complete, the construction loan is either converted to a permanent mortgage or paid in full.

The cost to build a house depends on a variety of factors like the size of the home you’re building, materials being used, customization and labor costs and geographic location. Other things to consider include land purchase, permits and fees, utility hookups and landscaping. If land isn’t included, this can reduce your costs, especially if you already own a lot

First thing you should do is consult with a local mortgage lender and if you are a Veteran, there are 100% financing options available. A CCM loan officer can help you navigate the various loan programs and find the best fit for your situation. You could also consider using land equity: If you own land, this can be an asset to leverage when securing financing.

Building a house may take up to 12 months, but the exact timeline depends on several factors like weather, permit and inspection speed, material and labor availability, custom vs. cookie-cutter design, and size and complexity of the house. Your builder should provide a detailed timeline for you.

When you’re comparing the costs of building a house versus buying one, you have two choices to consider. Building a house puts you in control of everything from the materials to the square footage to custom designs. When buying an existing house, the condition, competition from other buyers and market conditions all play a factor in how much you spend.

1. Pre-qualify for a home loan

2. Check your credit report

3. Meet with a CCM loan officer

4. Establish your homebuying budget

5. Get pre-approved

6. Work with a real estate agent

7. Find your dream home

8. Submit your mortgage application

9. Make an offer

10. Get a home inspection

11. Close your loan

12. Move into your home!

It depends on the home loan. For example, conventional loans require a minimum credit score of 620. But VA and FHA loans may allow homebuyers to qualify with a credit score as low as 500. It’s important to note that lower credit scores often come with additional requirements or higher interest rates.

It typically takes a few months to buy a home. The exact length of the process will depend on the market, home and other financing factors.

At CrossCountry Mortgage, we’re dedicated to making the mortgage side of homebuying smooth and stress-free – offering full approvals quickly through our FastTrack program.

First, let’s see if you qualify for certain government-back loans. If you are a Veteran or Service Member, VA loans require 0% down. Same goes for rural homebuyers with USDA loans.

Second, talk to a CCM loan officer about local, state and national down payment assistance programs that may cover your down payment costs.

That is more about you than the market! You’ll want to consider if you are ready to take on the homebuying process and then calculate your purchasing power with a CCM loan officer. Once you know your homebuying budget, it’s time to house hunt and explore your desired community for the home of your dreams.

Before you find your dream home, it will help to have:

• Your credit score
• Proof of employment and income
• Cash or assistance for a down payment
• The right loan
• A homebuying budget
• An expert real estate agent
• Your dedicated CCM loan officer