Want to build your own home? Do you have a contractor that you’re ready to hire?
Wasatch Peaks is here to help you build your dream home with a construction loan. What goes into a construction loan and how do you qualify? We’re here to help guide you through that too.
Basics of Construction Loans
In many cases where you’re building a new home from the ground up, you will not be able to get a standard mortgage. This is because the collateral used in a mortgage, the home, is not built yet. This is where a construction loan comes in. It usually lasts for one year, and then must either be paid off or converted into a standard mortgage once there’s a standing house to use as collateral.
Here are the basic requirements for qualifying for a construction loan:
Documentation: Similar to a traditional mortgage, your loan will require various pieces of information on your income, tax statements, credit history, debts and liabilities and various other areas. This information will need to be verified with documentation that you will supply, along with a credit check.
Down payment: Down payment requirements vary depending on your loan and situation. The general rule of thumb here is the more expensive the home, the higher the percentage often required.
Builder requirements: Construction loan builders must be approved and will typically have to supply the lender with references who can attest to their history. This is to ensure lenders don’t risk homes being partially built and then left unfinished.
Frequently Asked Questions
What terms are available?
Construction loans are available on 9- or 12-month terms from Wasatch Peaks.
Can the construction loan cover the land?
Yes, a construction loan can cover land costs along with the labor and materials for the home. The first draw from the loan can pay for the lot.
How much can I borrow?
We cover up to 80% of the estimated appraisal value. There is also a 20% down payment required.
Build Your Dream Home
Want to build your own home or have a contractor that you’re ready to hire? A construction loan from Wasatch Peaks is just what you need. It’s a great way to finance your short-term needs for your long-term mortgage.