#constructionloan #build #constructiontopermanentloan
It really is possible to build a house without putting any money down. You can get a construction loan for the entire build with a construction-to-permanent loan with zero down payment as long as you meet the four key criteria that I describe in this video.
1. You must use a construction to permanent loan to finance the build and absorb and debt you have on your land.
2. You need to already own the land that you want to build on in order to build a house with no down payment. If you don't own your land yet, you can still build for relatively low money down. It's possible to buy land with 20-30% down with a land loan and then the construction to permanent loan will pay off the remaining debt on your land loan so you still pay relatively low money down on the overall project.
3. You must qualify to borrow enough money to cover the entire construction cost as well as any remaining debt on your land. Lenders use standard debt to income ratio, credit score, and employment requirements in order to qualify you. Make sure you get pre-qualified or pre-approved in the very early stages so that you determine your budget for the project. You also need to interview builders and get quotes for how much construction will cost.
4. The biggest key to making this all work is EQUITY. The equity that you create by building a new home is what takes the place of any necessary down payment. Your lender will determine whether or not you will have equity in the completed property by ordering an appraisal before construction begins. The appraisal determines the future value of your completed house by comparing your plans to recently sold newer builds in the area. If the difference between the appraisal value and your loan amount is at least 20% of the appraisal value then you will not have to put down any cash for a down payment!
0:00 Into
0:31 Construction-to-Permanent Loan
2:43 Land
4:25 Budget
5:35 Equity
7:37 Example
Don't forget I am definitely not a financial advisor!
