Home Construction & Lots

Home Construction Loan FAQs

How much money do I need to put down?

A standard 20% of the value of the project is preferred to be injected into the transaction.

Do I have to bring my down payment to closing?

The details of your transaction will determine how the bank receives your down payment funds. If cash from you at closing is required, those funds will be expected at closing and will be put into an escrow account. All borrower contributed funds in the escrow account will be exhausted before draws on a loan take place to fund the the construction project.

What value is used to determine the down payment requirement?

The cost of the project and the appraised value are taken into consideration, and the higher of the two is used to calculate down payment.

What documentation will you need from me in order to complete a construction application?

In addition to the standard income, asset and liability information collected on a loan application, you will also need to provide the plans and specs for the build along with a cost breakdown for the project.

I own the land that the house will be built on free and clear. Can that be used as part of my down payment?

Yes. The value of owned land, minus any liens against the land, can be used as equity in the project.

Can I use my own builder/contractor for the project?

NEBAT maintains an extensive list of certified contractors who are approved for new home constructions projects with NEBAT. Please talk with your lender to see if your preferred builder is on our list.

Can I be the general contractor on the construction of my home?

Several factors are taken into consideration when deciding if a borrower can be their own general contractor on a project. A conversation with your lender will determine eligibility.

Who will handle the construction draws to pay the bills?

The title company involved in the transaction is the preferred agent to handle the construction draws and monitor the progress of the build.