Get an owner-builder construction loan

As a homeowner/builder looking for a construction loan, it’s important to remember that the bank has no idea of ​​your abilities to complete the construction of a home. The banker has no idea what his qualities, experience, and abilities are unless you tell him.

With your first build, the banker must be convinced that you can do the job before risking the bank’s money on your project. Your job is to study the building process from the inside out, until you can talk about it in your sleep.

Of course, you should have your house plans drawn up so your subcontractors can bid on them.

There are a few things you need to do before you get that construction loan.

Find two or more subcontractors in the various areas of your home construction who would be willing to make you a bid and build your home for you. It is important that you ask them if they would be willing to work with you. Some substitutes are not available because they work for a certain general contractor (GC) and no other.

1. Get estimated bids from your potential subcontractors to take to the bank when you go to apply for your construction loan. Also take a copy of your house plans with you. The first impression you make on your banker will be a lasting one, so make it right. You don’t and won’t know everything, and you can ask the banker if he’s willing to help you with questions you might run into, like “is this a reasonable price for xxxxx?”
2. Study your job as a general contractor so that you are well informed and understand the construction process in detail so that you can openly discuss it with the bank officer.
3. When we presented ourselves with all of our offers and the list of our alternates for the various jobs, our banker was shocked and exclaimed that her regular GCs never provided her with so much information.
4. Make sure your credit score is above 700 to make sure you’ll qualify for the loan. This may require some credit cleaning for you. If you need to “trim the fat” a bit first to pay off some debt, go for it. In the meantime, you can continue your education on the construction process and find your replacements.
5. We searched for subs, developed our house plans, found the land we wanted to buy, and received our offers, all of which took 7 months to accomplish before we even attempted our loan.

Explaining your understanding of the construction trade, with a summary of everything you’ve built before, is a great way to convince the loan officer that you’re capable of taking on this construction endeavor.

Think about anything you’ve built before, such as a high school store project, putting up a door, finishing your basement, replacing a sink drain or toilet tank fixture, building a garage, painting a room, replacing the shingles or siding on your house, gardening in your yard (laying down grass and plants), or even building a playhouse for your child. “Whatever” you’ve done is the operative word. Think back to when you were a kid and your dad taught you how to do this or that. He now presents everything you have built.

Now is the time to go to the bank with confidence and expect to get the loan. You should have done enough homework first, therefore you won’t waste your time or the bankers’ time.

You may need to shop around for a loan. . I do the shopping over the phone, until I find someone who is “interested” in working with me.

Someone once told me, you have to find the loan officer or bank that is “hungry” to make a loan. Remember: not everyone is “hungry,” so shop around until you find the one that is. Remember, there are many mortgage brokers, including the banker, who are trying to make a living, so search and keep searching.

Sell ​​your skills and qualities that will help build the house you want to build. Getting a loan depends as much on your ability to sell yourself as it does on your credit score. In this day of money shortage, you may have to look a little harder to find a loan, but it can be done. Believe it and you will find it.