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Building a Home

Financing question

7 years ago

My parents and I have been trying to find a home to move into but with our specific needs it's been a bit difficult. Some of our family nag us to build rather than buy. But from my understanding we'd have to have 20% down for that, and go from a short term construction loan and hope the VA loan appraisal (my parents are buying the house and they're disabled veterans) would take it afterwards.

I've read that some people have been able to get builder financing to reduce the upfront cost? How does that work? And can you do that with VA loans? I am also checking with moms lender about possibly using USDA loan as we're looking to move rural if that might be a better choice?

Another question on financing a build, I own my home and it appraises about double what I still owe on it, so think I should be able to have $50k in pocket at minimum when I sell it. If we wanted to build could we have the builder put a lean on my home to cover the upfront cost? Or any other recommendations?

Thanks!

Featured Answer

pamghatten

7 years ago

You really need to sit down and talk to a Lender that has experience in new construction with both VA and USDA loans. Both have requirements that must be met for properties that are not already existing.

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Comments (9)

BethA
7 years ago
The amount of down payment depends on the bank. We have acreage and will be going through Farm Credit for our construction loan. They will finance the construction loan up to 95%. The loan is a one-time close, so the interest rate is about 1/2 point higher than a two time close, but we will most likely refi at some point, so I'm not too concerned about it. The acreage plus house value will be added together to determine the overall value.... we are going with 80% of the value so that we don't end up with PMI. (our land is $90K and we are looking at $300K home... That's $390K... our loan to value rate will be 76%, so we won't have to pay PMI and won't have to put any money down) With the one time close, we are locked in at the cost to build... so any overages will have to come out of our pocket. We will have some cash available from the sale of our house to cover any incidental expenses plus to buy our light fixtures, appliances, etc.
ellusionz thanked BethA
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Sunnysmom
7 years ago
I just sent you a message for a mortgage company for VA construction loans.
ellusionz thanked Sunnysmom
PRO
Charles Ross Homes
7 years ago
Your question is best answered by a local lender who does VA loans. In my experience VA loans are a paperwork--if not a general-- nightmare.
ellusionz thanked Charles Ross Homes
ellusionz
Original Author
7 years ago
Moms already been approved for a VA loan, issue is finding the place we want for the price (found one over the weekend but the sellers took a cash offer over our VA loan). We already had started an offer on a house but it fell thru previously due to seller not wanting to make repairs, but they said all the paperwork is pretty much in so next time everything will go quicker that way.
Sunnysmom
7 years ago
The COE took all of 5 mins , all of the other financial docs were the same.
ellusionz thanked Sunnysmom
chellefnp
7 years ago
We did use the equity in our old house as the "down payment" for our construction loan. We only paid interest until we sold the old home, then paid off the bank with the proceeds.
ellusionz thanked chellefnp
Nodak
7 years ago
VA loan benefit meant zero down for us to build but don't forget there is lots of other things you put deposits down on to build. We are building in a subdivision as large lots or acres here is beyond our price point. We did not go with USAA after hearing horror stories of how long they take to do anything and closings being delayed. They may be great for insurance but we would never do a loan through them. Having a lender in your town you can walk in and talk to is a must have in our book.
ellusionz thanked Nodak
ellusionz
Original Author
7 years ago
A house actually came on market in our price range that fit most of our needs, and after I sell my house I can remodel it to fit all the needs :) Thanks for the info everyone! Hopefully we get to closing this time!

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