One Sentence Summary: This video describes the process of how National land developers have been building communities across America for decades; convince banks there is value through hard data. Good video on how to start a land development company. Now become a general contractor and you are in business.
I’m not seeing many people discussing FHA one time construction to permanent loans which seem to be an amazing deal. Are these hard to find? I’m just surprised I don’t see more people discuss the FHA version of this.
That's what I'm using with my clients. Unlike the loan advertised in this video, FHA can close one time, buy the land, fund the build, and then convert into a 30 or 40 yr fixed.
Amazing. Seems like exactly what we need. In your experience, are there many large lenders that offer this? I’m hoping to use it for new construction homes in the Phoenix, Arizona area.
@@1lildavis very interesting I was curious about this one bulk loan for land, construction then convert into mortgage. Also had no clue there was a 40 year.
Thank you for sharing this information. I was almost gave up and was about to sell my land in very desirable location. Now with this information about zero down payment loan I am going to move forward.
Very informative video Brandon thanks. Do you think lenders are still willing to do $0 down if you own the lot in 2023? I bought a lot and plan to build a duplex on it. 350k cost to build, 525k ARV.
It's definitely more challenging to make the numbers work now with current interest rates and high construction costs, but I'm sure it's still possible in some markets.
@@brandon-built Very interesting, I’m definitely going to talk to more lenders once I have my full estimate and floor plans ready to see if I can do minimal down payment. Builds are cash intensive since you have to pay subs before you get the draw from your bank. This is in the Oklahoma City market.
Well you sort of skate right over the land part Brandom. The bank isnt apt to issue a construction loan on a property that isnt paid for. Reason as you know is that they want a first place position with their loan. If the note on the land isnt recorded, and you have a deed showing you own it, that will certainly work in your favor. But as a rule, its first things first, pay off the land, which represents the required down payment. As you know, there is no such thing as a free lunch.
In this case, my construction loan absorbed my remaining land loan so now it's all under one loan. I didn't put any money down on the construction loan to build the house.
I am confused. Based on what vie found, a construction loan covers the building cost and the you'll need to get another loan for the mortgage? Where a Construction To Permanent Loan is one loan that covers the build cost and then transfers to a traditional mortgage once completed. My question: If you use a construction loan why would you need to get another loan as a mortgage? if you just paid to have the home built and pay that loan off is the home not paid for? why "two loans" why a mortgage? not sure if I'm making sense. Thanks.
Well usually if you have the money to pay off construction loan at the end of the term, then you probably don't need a loan at all. Construction loans are short term loans that come due at the end of construction . Most people don't ha ve the cash to pay that off so they get mortgage.
I've always wanted to try going modular or prefab. Just check with the local building department first because I wasn't able to use any of the modular options in my county. And also make sure that you can convince someone to assemble it unless you are doing it yourself. I couldn't find a contractor willing to assemble a modular home because there's no profit margin in it for them. Good luck!
This video was extremely helpful. I was thinking about financing a new construction, watching this was gold. I have a two questions 1) if I had to put a down payment due to insufficient built in equity from the appraised future value. And upon completion the property value goes up for more than the appraised value, would I be able to pull back my down payment ? 2) Does this loan process and the zero down payement work for investment property, like a duplex? Thank you!
I don't have direct experience with either situation, but my suggestion is to simply ask a few lenders these exact questions. If lenders say no to your first question, then you can always do a cash-out refi if you have sufficient equity. You may be able to get creative with the second question if you can claim it is a second home. I think most lenders will require some form of down payment for an investment property. Good luck!
Hi Brandon! I was wondering if you have any advice for couples looking to build their very first home as a tiny home. Are there other things we need to look out for?
Things I've heard about building tiny homes: Permanent foundation vs mobile are treated very differently by lenders so research what financing might be available. If you are relying heavily on financing then it may be difficult for a tiny home to appraise high enough for a sufficient loan to value ratio. Check with your local building department to make sure you are allowed to build the type of tiny home you are thinking of before you buy land or commit to anything. Talk to builders in the area to get a sense of the pitfalls.
Why do I have to buy the land separately? I understand everything else, but why do I have to buy the land first and then get the financing for the build? Especially if I can have a loan against the land which the bank will just absorb anyway... what's the purpose of this step? Why can't I finance the land with the construction to perm loan?
I'm guessing that there are already structures on the property. I do not have experience with this scenario but it is worth asking lenders if they'll do it.
Can you get a C2P loan without absorbing the original land loan? Especially if that land loan is at an absurdly low rate compared to what a new loan would be at.
Yea for sure. Makes a lot of sense to keep them separate if your land loan has a lower rate. Of course you should still confirm the C2P loan terms before signing anything since each lender's policies may differ.
when applying for a permloan home do i have to live there? i really wanted it for an investment purpose but do i tell the banks that when applying for a perm loan? i rent now and see good prices 2 hours away but i dont want to live there... what your thoughts thank you..
@@scratchlessputters that makes it harder to pull off because appraisals are notoriously low for tiny homes. Not saying it is impossible but it will be less likely to appraise at a high enough value to make up for the down payment.
Brandon, can you explain the process of using equity created as down payment? I am in Bay Area. Cost to build = $1.5M. New house value after completion = $3.5M. Equity created $2M. Does this mean I will not have to make any down payment? How can I leverage this equity to pay the monthly construction loan installments?
Those numbers sound great to me. If they are accurate then I would be surprised if you have to put any money down. I recommend you call Upmqua or a similar lender to speak with a construction specialist. Tell them about your project and they will explain the process. You don't have to commit to anything, just get as much info from them as you can. Good luck.
Does the home that youre building have to be around the same property value as surrounding home near you? Like if homes near me are 2000sqft and cost 800k but I want to build a home that’s 400k and 1000sqft would that even be possible?
@@Justsayin71 in my experience the math isn't so simple. it doesn't cost half as much to build a home that's half the size. It would be more like $500k to build a 1000 sq ft home in your case. And that makes it harder to appraise. Depends on your unique location though. It might work out
@@brandon-built thanks for the reply! But in terms of even getting approved to build a home that’s 20%-30% cheaper than surrounding homes. Would the city/lender even approve a build like that?
@@Justsayin71 the good thing about most building departments is that they will answer that question for you before you commit to or pay for anything. Just give them a call. Good luck!
Question, so I bought my land cash and my plan is to build a single family home and also on the back of the lot there is an existing 600 square feet garage that i want to convert to a duplex, my question is do you think the bank will give me a loan to cover all of that in one loan or would they make me get a separate loan to convert the garage into a duplex?
That sounds like an awesome project, but I'm not sure 🤔. If I had to guess...you might be able do the whole thing under one loan if you put 20-30% down. Otherwise you might be able to do zero down on the primary residence and then a separate loan with 30% down on the duplex. My advice is definitely to reach out to a few construction lenders and just ask. I'm really curious to hear what they let you do. Good luck!
Brandon, this video has been extremely helpful. I am in Bay Area and I believe you are too. Can I contact you directly if I have questions? I am in the process of lot split and build new home. My main concern is I want to spend on this project only if I am sure I will qualify for the construction loan. What is the sequence of steps you would recommend? Do lenders give pre approval for construction loan first, before I start spending on survey, design, etc?
The projected final value of the completed property needs to be high enough to cover the loan amount+20%. Whether it's in a rural or urban area. You can include pretty much anything you want in the construction loan as long as you qualify for enough $$$ to cover everything.
Rural area will have less comps for the lender to use when determining your projected value so that might make it more difficult to get the zero down loan
Are builders usually agreeable to a fixed price contract? Ive known people that have had supply charges raised just days before closing in that they thought was a “fixed price contract.”
Question, when the new build appraises for more than the cost of the build plus land, does that increase your loan amount when you use the “created equity” from the build as your down payment?
I had to think about that one. I think the answer is yes because you are getting approved for a higher loan amount that you otherwise wouldn't be able to qualify for without the created equity.
How can you get a proper construction price quote from builders without exact building plans? And if you need the plans before you decide on a builder, who do you go to to draw up these plans and put them on paper? Or, are you giving each builder you "interview" basic plan wishes? I'm just confused a bit and want to be sure I'm doing everything in the proper order to save time. It almost sounds like applying for the actual loan is close to the last step, as the applicant needs to know how much it will cost, provide building plans, etc. So, secure the land, check. Then, talk to builders first to get estimates and general design features? Or lenders first? Ugh..Please help.
The actual loan application is the last step, but you should involve your lender from the very beginning to figure out your budget. Talk to contractors/builders to get a rough idea of the cost to build based on general specs that you provide them like square footage, number of beds and baths, site issues, etc. If needed, adjust your general specs based on the rough prices. Design the house, either with an architect or with a design build company. Engineering is not always needed yet. Get accurate quotes from builders based on your drawings. Take those drawings and a signed building contract and apply for the construction to permanent loan.
@@brandon-built Brandon, thank you so very much for the quick response and excellent information. It really means a lot! We get so clouded with the process and your videos are quickly becoming the necessary ammo we need to get it done. We will succeed. Thanks again my friend, you've got a new sub!
Yes. My understanding is that most lenders will require the owner to be a licensed contractor for owner/builder to be financed with one of these construction loans.
If you don't have a boatload of cash then I would start by getting pre-qualified from a construction lender to see what your budget is. At the same time you can talk to a bunch of contractors in your area to get an idea of roughly how much it costs to build. If everything seems feasible within your budget then you can move forward.
I'm clueless here very early starting out and just trying to get info! But how do you find reliable builders? I'm scared that I'll have a horror story!
Reviews reviews and more reviews . Read them . Also go see the work in person if possible . I've looked at homes that were done by the builder I chose .
I want to do a new construction loan but every financial institutions I go to they want 20% down and my credit is good. I live in MISSISSIPPI. what can I do to get a construction to permanentl loan. Need all the help I can get.
So I only bought land and paying 200$ a month for it, and I want to do a shed/ garage home conversion for under 70k, im only 24 and I make 29k a year, and it seems like it would be cheaper a month than rent. I have construction friends, Do you think Im being too optimistic? Would a 80k loan plus my 200 be cheaper in the long run? I just want the cheapest option without renting, any advice?
Compare your projected monthly payment to the current market rate rent for a similar size space. Your ability to build what you're talking about depends 100% on what your county's building department allows in terms of alternative housing solutions. Call them up today and see what your local laws allow.
I make monthly payments like any other mortgage. I was approved for the loan amount based on debt to income and creditworthiness so it's within my means.
The project is appraised and the loan is signed prior to construction so the bank can't take it away if home values sink during the course of construction. As long as you weren't planning on selling the property immediately after building it then you can wait out any home price declines.
US Bank is the only big bank that I know of, but regional banks are your best bet. Try Umpqua if you're on the west coast or any bank that offers construction to permanent loans.
Anyone know of any lenders who offer NO interest only payments throughout construction? (Before you say there aren't any, there is one that I've found, The Mcknight Team in texas)
@@brandon-built OH!!! okay, I remember submitting something to FHA a few months ago, so must've forgotten since we've spoken to so many people since then, Lenders and builders haha. Thank you!
But USDA loans are only available to a small sunset of people which is why they aren't covered here. Construction to permanent loans are available to everyone.
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One Sentence Summary: This video describes the process of how National land developers have been building communities across America for decades; convince banks there is value through hard data.
Good video on how to start a land development company. Now become a general contractor and you are in business.
Similar approach I suppose, but this is accessible to Joe Schmo.
I’ve looked at so many videos about construction to perm loans. This has been the most helpful!
I'm glad you found it helpful! Let me know if you have any questions.
This has been soooo helpful! I am currently in the process and bought my land cash!! Thanks 👍🏽👍🏽
Nice! Buying your land with cash gives you a lot more flexibility with how you can finance the construction phase!
Congrats. Just bought 5 acres looking to build
The most informative video on this matter thus far, great job! Thank You!
Thanks for watching!
Are you familiar with lenders in Texas that do no money down for the construction to permanent loan? This video is awesome!
This is amazing, thank you for this video. So much rich content, this was incredibly helpful!
I’m not seeing many people discussing FHA one time construction to permanent loans which seem to be an amazing deal. Are these hard to find? I’m just surprised I don’t see more people discuss the FHA version of this.
That's what I'm using with my clients. Unlike the loan advertised in this video, FHA can close one time, buy the land, fund the build, and then convert into a 30 or 40 yr fixed.
Amazing. Seems like exactly what we need. In your experience, are there many large lenders that offer this? I’m hoping to use it for new construction homes in the Phoenix, Arizona area.
@@angelicamichelle827 did you find one I live in az looking for the same thxs
@@1lildavis is this possible in Florida and what if u already own a home that u plan to rent out
@@1lildavis very interesting I was curious about this one bulk loan for land, construction then convert into mortgage. Also had no clue there was a 40 year.
Thank you for sharing this information. I was almost gave up and was about to sell my land in very desirable location. Now with this information about zero down payment loan I am going to move forward.
Happy to help!
Super high quality video. Very few people are sharing anything like this on youtube.
Thank you 🙏
Awesome video! Thanks for the detailed guide. Side note, what color paint is your wall? Looking to paint home office a similar look
This dude is good
TOO GOOD LOL
This is a fantastic explanation of how construction to permanent loans work.
Thank you
Awesome video!!! Outstanding explanation, nice and clear! Thank you
You're very welcome!
Can we work on some of the projects in the future house? Like drywall, cleaning, painting etc. or contractor have to hire his own people?
Excellent description. I learned a lot
Thanks 😊
Very informative video Brandon thanks. Do you think lenders are still willing to do $0 down if you own the lot in 2023? I bought a lot and plan to build a duplex on it. 350k cost to build, 525k ARV.
It's definitely more challenging to make the numbers work now with current interest rates and high construction costs, but I'm sure it's still possible in some markets.
@@brandon-built
Very interesting, I’m definitely going to talk to more lenders once I have my full estimate and floor plans ready to see if I can do minimal down payment. Builds are cash intensive since you have to pay subs before you get the draw from your bank. This is in the Oklahoma City market.
Wow, this was so informative. Thank you!
You're so welcome!
Very informative. Thank you!
You're welcome!
Really enjoyed your video. Thanks it was very helpful.
Great tips and a Sithu Aye fan, subscribed!
Great video Brandoman! Greatly appreciated
Well you sort of skate right over the land part Brandom.
The bank isnt apt to issue a construction loan on a property that isnt paid for.
Reason as you know is that they want a first place position with their loan.
If the note on the land isnt recorded, and you have a deed showing you own it, that will certainly work in your favor.
But as a rule, its first things first, pay off the land, which represents the required down payment.
As you know, there is no such thing as a free lunch.
In this case, my construction loan absorbed my remaining land loan so now it's all under one loan. I didn't put any money down on the construction loan to build the house.
Thank you so much , this is so helpful!!
You're welcome!
Great job explaining this so that I could understand!
Glad it helped!
I am confused.
Based on what vie found, a construction loan covers the building cost and the you'll need to get another loan for the mortgage? Where a Construction To Permanent Loan is one loan that covers the build cost and then transfers to a traditional mortgage once completed.
My question: If you use a construction loan why would you need to get another loan as a mortgage? if you just paid to have the home built and pay that loan off is the home not paid for? why "two loans" why a mortgage?
not sure if I'm making sense. Thanks.
Well usually if you have the money to pay off construction loan at the end of the term, then you probably don't need a loan at all. Construction loans are short term loans that come due at the end of construction . Most people don't ha ve the cash to pay that off so they get mortgage.
Very Helpful, been thinking about putting in a Modular instead of building. What is you opinion?
I've always wanted to try going modular or prefab. Just check with the local building department first because I wasn't able to use any of the modular options in my county. And also make sure that you can convince someone to assemble it unless you are doing it yourself. I couldn't find a contractor willing to assemble a modular home because there's no profit margin in it for them. Good luck!
Great work bud 💯🙏🏡
🙏
Great video!
Absolutely perfect explanation! We are doing this in Alabama and it works!
It feels like a cheat code
What bank/ credit Union did you use?
Avadian Credit Union
This video was extremely helpful. I was thinking about financing a new construction, watching this was gold. I have a two questions
1) if I had to put a down payment due to insufficient built in equity from the appraised future value. And upon completion the property value goes up for more than the appraised value, would I be able to pull back my down payment ?
2) Does this loan process and the zero down payement work for investment property, like a duplex?
Thank you!
I don't have direct experience with either situation, but my suggestion is to simply ask a few lenders these exact questions. If lenders say no to your first question, then you can always do a cash-out refi if you have sufficient equity. You may be able to get creative with the second question if you can claim it is a second home. I think most lenders will require some form of down payment for an investment property. Good luck!
Great info!
Thanks!
Hi Brandon! I was wondering if you have any advice for couples looking to build their very first home as a tiny home. Are there other things we need to look out for?
Things I've heard about building tiny homes:
Permanent foundation vs mobile are treated very differently by lenders so research what financing might be available. If you are relying heavily on financing then it may be difficult for a tiny home to appraise high enough for a sufficient loan to value ratio. Check with your local building department to make sure you are allowed to build the type of tiny home you are thinking of before you buy land or commit to anything. Talk to builders in the area to get a sense of the pitfalls.
Do you know of any lenders the will allow an owner builder project?
Why do I have to buy the land separately? I understand everything else, but why do I have to buy the land first and then get the financing for the build? Especially if I can have a loan against the land which the bank will just absorb anyway... what's the purpose of this step? Why can't I finance the land with the construction to perm loan?
@@TheZeedler it didn't make sense to me either, but that was the rule
So informative
Thanks for the video, looking in getting a construction to permanent load, any advice.
Start with finding lenders and speaking with them to determine your budget
After scrolling and seeing no one mention it, I'll be the one to mention it. I love the Intervals and Plini albums on the wall. Cheers mate
You are the first one to mention it in any of my videos! Seen them both at many shows over the years. Cheers
Can you recommend any lenders in California ?
Umpqua
Did you say Tahoe as in Lake Tahoe? Because I'm also looking to start my home build near South Lake Tahoe.
How would it work if we are wanting to build a home on a property that family owns? So we can all live on the same property with 40 acres
I'm guessing that there are already structures on the property. I do not have experience with this scenario but it is worth asking lenders if they'll do it.
Can you get a C2P loan without absorbing the original land loan? Especially if that land loan is at an absurdly low rate compared to what a new loan would be at.
Yea for sure. Makes a lot of sense to keep them separate if your land loan has a lower rate. Of course you should still confirm the C2P loan terms before signing anything since each lender's policies may differ.
Great video! We are looking to buy some land and this was awesome. Thanks a lot man
No problem! I just went through the process so let me know if you have any questions.
when applying for a permloan home do i have to live there? i really wanted it for an investment purpose but do i tell the banks that when applying for a perm loan? i rent now and see good prices 2 hours away but i dont want to live there... what your thoughts thank you..
You don't have to live there. They do it for second or vacation homes too.
How does this method apply to tiny home/treehouse builds for STRs? Thanks
Is the tiny home/tree house an ADU or will it be the primary structure?
@@brandon-built it will be the primary structure
@@scratchlessputters that makes it harder to pull off because appraisals are notoriously low for tiny homes. Not saying it is impossible but it will be less likely to appraise at a high enough value to make up for the down payment.
thanks for your reply@@brandon-built
Brandon, can you explain the process of using equity created as down payment? I am in Bay Area. Cost to build = $1.5M. New house value after completion = $3.5M. Equity created $2M. Does this mean I will not have to make any down payment? How can I leverage this equity to pay the monthly construction loan installments?
Those numbers sound great to me. If they are accurate then I would be surprised if you have to put any money down. I recommend you call Upmqua or a similar lender to speak with a construction specialist. Tell them about your project and they will explain the process. You don't have to commit to anything, just get as much info from them as you can. Good luck.
Does the home that youre building have to be around the same property value as surrounding home near you? Like if homes near me are 2000sqft and cost 800k but I want to build a home that’s 400k and 1000sqft would that even be possible?
@@Justsayin71 in my experience the math isn't so simple. it doesn't cost half as much to build a home that's half the size. It would be more like $500k to build a 1000 sq ft home in your case. And that makes it harder to appraise. Depends on your unique location though. It might work out
@@brandon-built thanks for the reply! But in terms of even getting approved to build a home that’s 20%-30% cheaper than surrounding homes. Would the city/lender even approve a build like that?
@@Justsayin71 the good thing about most building departments is that they will answer that question for you before you commit to or pay for anything. Just give them a call. Good luck!
Does the equity come off the loan amount like a cash down payment?
Equity doesn't come off the loan but it does count towards value in the loan to value ratio.
Hey Brandoman …you should post those lenders that gives you no down payment on your construction loan…
Question, so I bought my land cash and my plan is to build a single family home and also on the back of the lot there is an existing 600 square feet garage that i want to convert to a duplex, my question is do you think the bank will give me a loan to cover all of that in one loan or would they make me get a separate loan to convert the garage into a duplex?
That sounds like an awesome project, but I'm not sure 🤔. If I had to guess...you might be able do the whole thing under one loan if you put 20-30% down. Otherwise you might be able to do zero down on the primary residence and then a separate loan with 30% down on the duplex. My advice is definitely to reach out to a few construction lenders and just ask. I'm really curious to hear what they let you do. Good luck!
Know anything about owner-builder or DIY loans?
I do not, sorry.
Brandon, this video has been extremely helpful. I am in Bay Area and I believe you are too. Can I contact you directly if I have questions? I am in the process of lot split and build new home. My main concern is I want to spend on this project only if I am sure I will qualify for the construction loan. What is the sequence of steps you would recommend? Do lenders give pre approval for construction loan first, before I start spending on survey, design, etc?
My email is in my channel page 👍
thanks that explained a lot
No problem!
Do you have a worksheet you used to budget this that is similar to the one your GC sent that you used in the video?
Link to spreadsheet is in the description. Thanks for watching!
Would this all work with a rural piece of land? And could the construction loan include running utilities to the lot?
The projected final value of the completed property needs to be high enough to cover the loan amount+20%. Whether it's in a rural or urban area. You can include pretty much anything you want in the construction loan as long as you qualify for enough $$$ to cover everything.
Rural area will have less comps for the lender to use when determining your projected value so that might make it more difficult to get the zero down loan
THATS A ROCKIN AMP YA GOT THERE
🤘
Are builders usually agreeable to a fixed price contract? Ive known people that have had supply charges raised just days before closing in that they thought was a “fixed price contract.”
Reputable builders should be very familiar with the fixed price contract requirement of construction lenders
Question, when the new build appraises for more than the cost of the build plus land, does that increase your loan amount when you use the “created equity” from the build as your down payment?
I had to think about that one. I think the answer is yes because you are getting approved for a higher loan amount that you otherwise wouldn't be able to qualify for without the created equity.
Are the permit costs all out of pocket? Not financed within the construction loan?
Mine are completely financed. It's up to you
How can you get a proper construction price quote from builders without exact building plans? And if you need the plans before you decide on a builder, who do you go to to draw up these plans and put them on paper? Or, are you giving each builder you "interview" basic plan wishes? I'm just confused a bit and want to be sure I'm doing everything in the proper order to save time. It almost sounds like applying for the actual loan is close to the last step, as the applicant needs to know how much it will cost, provide building plans, etc. So, secure the land, check. Then, talk to builders first to get estimates and general design features? Or lenders first? Ugh..Please help.
The actual loan application is the last step, but you should involve your lender from the very beginning to figure out your budget. Talk to contractors/builders to get a rough idea of the cost to build based on general specs that you provide them like square footage, number of beds and baths, site issues, etc. If needed, adjust your general specs based on the rough prices. Design the house, either with an architect or with a design build company. Engineering is not always needed yet. Get accurate quotes from builders based on your drawings. Take those drawings and a signed building contract and apply for the construction to permanent loan.
@@brandon-built Brandon, thank you so very much for the quick response and excellent information. It really means a lot! We get so clouded with the process and your videos are quickly becoming the necessary ammo we need to get it done. We will succeed. Thanks again my friend, you've got a new sub!
Can you do a video on interviewing builders?
Maybe someday if I get some time
Thank you sir
Does this work for owner/contractor's? As long as we get qoutes/contracts on all work?
Yes. My understanding is that most lenders will require the owner to be a licensed contractor for owner/builder to be financed with one of these construction loans.
I have 2 acres of land from family. How should I build a house on it?
If you don't have a boatload of cash then I would start by getting pre-qualified from a construction lender to see what your budget is. At the same time you can talk to a bunch of contractors in your area to get an idea of roughly how much it costs to build. If everything seems feasible within your budget then you can move forward.
I'm clueless here very early starting out and just trying to get info! But how do you find reliable builders? I'm scared that I'll have a horror story!
Start on Houzz since at least there are reviews on there. Reach out to the most promising ones and just start discussing your project.
Reviews reviews and more reviews . Read them . Also go see the work in person if possible . I've looked at homes that were done by the builder I chose .
Thank you!
I want to do a new construction loan but every financial institutions I go to they want 20% down and my credit is good. I live in MISSISSIPPI. what can I do to get a construction to permanentl loan. Need all the help I can get.
So I only bought land and paying 200$ a month for it, and I want to do a shed/ garage home conversion for under 70k, im only 24 and I make 29k a year, and it seems like it would be cheaper a month than rent. I have construction friends, Do you think Im being too optimistic? Would a 80k loan plus my 200 be cheaper in the long run? I just want the cheapest option without renting, any advice?
Compare your projected monthly payment to the current market rate rent for a similar size space. Your ability to build what you're talking about depends 100% on what your county's building department allows in terms of alternative housing solutions. Call them up today and see what your local laws allow.
Should the denominator of the equation be "loan"?
What about the USDA loans with no money down
How do you make payments on the $800K loan though?
I make monthly payments like any other mortgage. I was approved for the loan amount based on debt to income and creditworthiness so it's within my means.
Which lenders do “no money down” In Florida?
Try US Bank. I'm not familiar with local lenders in Florida.
What if house values sink during construction ? Then what ?
The project is appraised and the loan is signed prior to construction so the bank can't take it away if home values sink during the course of construction. As long as you weren't planning on selling the property immediately after building it then you can wait out any home price declines.
Does this work with family owned property?
I'm not sure if the title for the property is taken into consideration by the lender but the math still works the same.
Can you name a lender that uses the 20% unseasoned future equity as 20% down payment?
US Bank is the only big bank that I know of, but regional banks are your best bet. Try Umpqua if you're on the west coast or any bank that offers construction to permanent loans.
I want a luxury custom home for 300k or less ? is that realistic ?
Not in the U.S. unless it's a very small home or you do 100% of the work yourself. Gotta consider the land and soft costs as well.
you still have to pay the interest on every draws
Yup that's how the bank makes their money.
In short, you want your land value appraised before getting this loan.
You want the imaginary future finished property appraised for 20% more than your loan .
That's great
🙏
Anyone know of any lenders who offer NO interest only payments throughout construction? (Before you say there aren't any, there is one that I've found, The Mcknight Team in texas)
That looks like an FHA only loan. I can't see a bank lending money for free without someone else taking on the risk.
@@brandon-built OH!!! okay, I remember submitting something to FHA a few months ago, so must've forgotten since we've spoken to so many people since then, Lenders and builders haha. Thank you!
@@WhatDidIJustWatch78701 there might be similar options out there, especially with more local or regional banks. Good luck with your project!
But are you then stuck with a $1M mortgage in the end instead of the $800K you actually borrowed for the build?
In this case yes. If you roll any remaining debt on the land into the construction loan then it adds to the total mortgage
What if you don't owe anything on the land but the appraisal is still more than the cost of the build ?
Oh my God 3% interest.... 😢😢😢😢Here in our country it's more than 7%
Luckily I locked in my rate in 2021 when rates were still low. If I were to do it now it would be closer to 7%.
Thank you, thank you, thank you!
You are welcome!
Dude I need you as my mentor
🙏
Post links
🤯
😀
Owning the land first is still money down
If you don't have land then you'll probably have to put at least 30% down on the land. But then the build can be done for zero down.
VH!
Thanks!
IF you can qualify. %%%
Very true
Lies
Hi I need your help
What's up?
I thought USDA construction loan lets you also buy the loan with zero money down
But USDA loans are only available to a small sunset of people which is why they aren't covered here. Construction to permanent loans are available to everyone.
Great video!!
Thank you!
Thank you!
No problem!
Thank you!
You are very welcome!