New Construction Loans: What You Need to Know

Are you planning to build a new home? If so, you’ll need to consider financing options, such as new construction loans. At Citizens Financial, we offer one-time close new construction loans that can help make the financing process more straightforward and convenient. In this post, we’ll explore the ins and outs of new construction loans and how they work.

What is a new construction loan?

A new construction loan is a type of financing used to build a new home. Unlike a traditional mortgage, which is used to purchase an existing home, a new construction loan provides funds to cover the cost of construction. The loan is typically paid out in installments as the construction progresses.

How do new construction loans work?

New construction loans work differently than traditional mortgages. With a new construction loan, you’ll typically receive funds in a series of “draws” as construction progresses. For example, you may receive an initial draw to purchase land, followed by additional draws to cover the cost of materials, labor, and other expenses as construction continues.

What to expect during the construction process?

Building a new home can be a complex process, and it’s important to understand what to expect during the construction process. The process typically involves several phases, including:

1. Pre-construction: This phase includes planning, design, and permitting.
2. Foundation: This phase involves pouring the foundation and laying the groundwork.
3. Framing: This phase involves building the frame of the home, including walls, floors, and roof.
4. Exterior: This phase involves adding exterior finishes, such as siding, roofing, and windows.
5. Interior: This phase involves installing insulation, electrical, plumbing, and HVAC systems, as well as adding interior finishes, such as drywall and flooring.
6. Final inspection: Once construction is complete, a final inspection is conducted to ensure that the home meets all building codes and standards.

How to qualify for financing?

Qualifying for a new construction loan typically requires a higher credit score and a larger down payment than a traditional mortgage. You’ll also need to provide detailed plans and specifications for the home, as well as a detailed budget that outlines the cost of materials, labor, and other expenses.

Citizens Financial’s one-time close new construction loans

At Citizens Financial, we offer one-time close new construction loans that combine the construction loan and permanent financing into one loan. This means you won’t need to go through the hassle of refinancing once construction is complete. We offer both VA and conventional loans, and our experienced loan officers can guide you through the process to ensure you get the financing you need to build your dream home.

In conclusion, if you’re planning to build a new home, a new construction loan may be the right financing option for you. At Citizens Financial, we offer one-time close new construction loans that can make the financing process more straightforward and convenient. Contact us today to learn more about how we can help you build the home of your dreams.

NMLS #1401042 | info@citizensfinancial.co | 707-800-6047

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