10 Things You Should Know About New Construction Loans

You are finally ready to buy your dream home! You found the perfect lot, in the perfect neighborhood. All that is standing between you and the house is the mortgage process. Have you met with a lender and considered all of your different options regarding new construction loans? Do you know what to look for, red flags, and different things that may happen in this process? Here are 10 things to know when you are looking to get a loan.

  1. Know the Different Types of Loans

Understand that there are 3 main types of construction loans. One-time close, construction only, and renovation construction loans. One-time close allows you to bundle your construction and mortgage costs together. This allows you to lock in your rates at closing. Construction only covers only the cost of the construction and must be paid in full when that part is done. Renovation loans typically get folded into the mortgage when the construction is completed.

  1. It May Be Difficult to Qualify for a Construction Loan

When you take on this type of loan, the lender is taking on more risk. Because it is based on the assumed value, the numbers can be off, and it is not always as detailed and specific as it needs to be. If the borrower cannot make payments, then it falls again on the lender.

  1. The Lender Does Not Always Offer This Option

Because they assume more risk, you may not even know that this is an option. If you are a responsible candidate, make sure you know about this option. It could really help you financially in the long run. Just be aware that lenders who don’t bring it up typically do not want to deal with any difficulties.

  1. Lenders May Need Proof of Payments

Be prepared to show your credit score, debt-to-income ratio, make a down payment, and go over different repayment options.  There may be new things that come up that you will have to pay for so be ready to prove to your lender that you can do so.

  1. Any Financial Change in Your Life Can Affect Approval

If you are planning to get a new job anytime soon, keep in mind that this could have a direct effect to your mortgage getting approved. Lenders will usually be upfront about this, but you if have any major financial change, this could affect the process.

  1. Sometimes Construction Goes Wrong

Building a house can be complicated. Construction deals with materials, weather, and other outside factors that can cause issues. Basically, expect the unexpected and know that there may be extra costs you were not planning on having.

  1. Get Everything in Writing!

This may seem like common sense but because so many things change and so much is up in the air, it is so important to get every detail down on paper; especially for the what-ifs that may happen.

  1. Home Inspections are Important

Make sure that whoever is inspecting your home, knows what they are doing. Remember, you are the one who is paying for all this in the long run. Make sure you do not sign off on anything until everything passes inspection and you are satisfied.

  1. Know the Timeline

You should know that a typical process for this type of loan could take weeks. There is so much that goes into it and many different aspects that must be checked.

  1. Understand Closing Costs

During closing costs, you will go through additional credit check, and processing fees. You may also have to deal with attorney fees and home inspection costs.


There is so much that goes into a construction loan. From specific costs to lender policies, you may be running an uphill battle at times. If, however things go smoothly and you have a great lender on your side, this could really benefit you financially. Check with different lenders to see what loan would fit you best.

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We're proud to be on the cover and to showcase our Oaklen II model in the MCBIA's "Best of the Best 2021 Custom Design Homes". See Page 7 for additional info & photos. This unique home has garnered attention across the industry and has had over 300,000 views and 2,200 shares. Visit www.securebuilt.com/models-floorplans/oaklen-2/ for photos and additional information.Thank you to our sponsors and advertisers in the 2021 Fall Magazine!Thank you to Secure Built, LLC - Custom Home Builders for being our cover sponsor. Thank you to our article and advertiser sponsors:Carpet One of Ocala Foundation Services of Central Florida Mortgage Financial Group, Inc. NMLS #219650 Trinity Surfaces Miller and Sons Plumbing, Inc Tillman & Associates Engineering Lucinda Striker, Realtor Two Brooms & A Mop Insulco Insulation Belac Homes Homes By Deltona Bowen Tile Sales Wilmek Construction Allen Curry Plumbing AR Homes by Arthur Rutenberg Trinity Insurance T.L. Carlson Construction Co. Curington Homes Ocala floors and more llc Collier, Jernigan, Eastman & Zublick, P.A. Keystone Construction & Development, Inc. Choice Maintenance First American Title www.homesandland.com/Digital-Magazine/0417-46-09-Homes-and-Land-of-Ocala-Marion-County/#23 ... See MoreSee Less
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Secure Built, LLC - Custom Home Builders
Thank you to Megan & Kyle L. for giving us the opportunity to build them a gorgeous 4/3/3 version of our Southern Sunrise model! They took 🔑's on 12/23 and were moved in with Christmas tree up & celebrating Christmas morning in their new Secure Built home!4 beds, 3 baths, 3 car garage2,499 sqf living, 3,681 sqf totalThank you both again for being great clients & friends! ... See MoreSee Less
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