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2014 New Home Loan: How do construction loan down payments work?

Posted by Penny Hull on Tue, May 27, 2014 @ 13:05 PM

New Home Construction Loan

How do construction loan down payments work?

How much are construction loan down payments for 2014 new homes?

In the current market, banks are requiring from 5-20% down.

When you contact Stanton Homes, we'll provide a list of more than 10 different lenders that offer construction financing. 

How do I apply for a construction loan? 

Step 1: Get Pre-qualified

Before choosing a home 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 is Needed?

This is a tough question, because builders’ requirements can differ.  A general guideline for your equity investment is 5-20% 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 closings – typically in the range of 2%-3% of the loan amount. 

What is a Typical Deposit Amount?

Once you've narrowed down your list of builders, ask them about down payment and investment requirements before you sign a contract. 

While builder requirments can vary, Stanton Homes only requires a $5000 deposit on most new custom homes. 

Tags: getting a construction loan, construction loans, construction to permanent