New Construction Loans

New Construction Loans are loans for the construction of new properties.

These loans typically cover the costs of building the structure, the land or lot where the home will be placed, the construction company’s costs, material costs, and other things.

What are new construction loans

New construction loans help people build and remodel a home from the ground up. These loans cover the costs of building a home from scratch, but can also encapsulate remodeling if it’s extensive.

Typically, self-build loans will cover:

The land on which the home will be built
Construction company’s labor and fees
Material costs
Home and roof framing costs
Home building
Any permits

How many types of these loans are there?

A new construction loan is a type of home construction loan. There are several different subtypes as well, including:

Construction-to-Permanent – Borrow funds to pay for construction costs. Once you move in, your loan is converted into your permanent mortgage.
Construction Only – Two separate loans: one for construction of the home, and another once you move in, a mortgage to pay off construction.
Renovation – Borrow against renovated home’s expected value.
Owner-Builder Construction – You can only qualify if you’re the builder of your home and can prove it with proper certification.
End Loan – In this case, the home builder absorbs the costs of building the home. When finished, you simply buy the house from the builder with a mortgage.

Fix and Flip South Carolina - Gauntlet Funding

Who are new construction loans best suited for?

Self-build loans are a great way to finance new home construction. These loans are also a good choice for fix and flip investors. In order to qualify, you’ll need:

Good to excellent credit
Low debt-to-income ratio
Stable income
A down payment, usually about 20%

Your lender will also likely want more information about the project itself and your plans for the home.

Pros and Cons of Self-Build Loans

New construction loans are a great way to finance new construction, but make sure you talk to an expert and consider the pros and cons before committing.

Pros

Fast financing
Makes it easy to fund new construction
Flexible and convenient
Comprehensive funding
Smaller monthly payments

Cons

With certain types of new construction loans, you may have to pay two sets of closing costs
Must plan ahead; costs may be higher than you first expected
Typically higher down payment requirements
Possible delay penalties

HOW TO APPLY FOR NEW CONSTRUCTION LOANS

If you’re a real estate investor looking for a way to finance new construction, Gauntlet Funding has your back. With over 20 years of experience funding various fix and flip projects, our team has the knowledge and expertise to help you get the financing you need fast.

To get started, simply call us at 631-465-2161. We’ll answer your questions and address any concerns you may have. If you’d like to expedite the process, simply fill out our easy online application.