Required Documents for Qualified Builder

Construction Financing also known as Draw Mortgages

Mortgage financing is available to purchase serviced land and then to build a home. Depending on the type of Builder, the following will be required:

1) Qualified Builder - having your home built by a qualified Home Builder at a fixed price.
2) Self Builder - you are your own general contractor where you sign contracts with sub-trades.

Documents Required for Qualified Builder

a) Signed and accepted copy of building contract
b) One complete set of house plans and working drawings (blue prints)
c) Site Plan showing legal description, dimensions of property in detail
d) Confirmation Builder is a “New Home Warranty” builder
e) An Appraisal indicating final value once the home is constructed

Applicants must qualify under normal underwriting guidelines. The value used for financing is the value determined by the Appraisal. (if land purchase is $125,000 and based on the plans, the value of the home is worth $300,000, the total value used for lending purposes would be $425,000). If the applicant has 15% down payment, the lender will advance construction monies up to a total value of $361,250.00, which is 85% of the total appraised value.

**There are a few important things to remember when doing construction financing**
1) You will not be paid until the home is complete.
2) Client must use their own money to do the build, they will then be reimbursed by lender once the house has been completed to certain stages. This requires additional funds over the down payment. Line of Credit (LOC) must be in place to draw upon for the construction costs.