Getting Started/Getting Qualified

Any owner builder construction loan begins with proper financial planning. We can assist you with determining how much home you can afford to build, the projected monthly payments, and the proper budget for your project. Once these things are determined, the actual planning, then building, can begin.

Planning for your Owner Builder Loan -
What you will need

1. Knowledge of your credit scores. If you are not sure of your credit (FICO) scores, please see our discussion of credit scores at About Credit Scores.
   
   
2. Know your income. Is your income based on a set salary or a guaranteed hourly rate? Is any part of it based on bonuses, commissions or other non-guaranteed income? Are you a W-2, 1099 or Self-employed employee? All of these things will be important in determining your actual income for the purpose of an owner builder mortgage loan. If you are self-employed or cannot document your income fully, please refer to our loans for Stated Income borrowers.
   
   
3. Understand your liabilities. Mortgage lenders look at your monthly debts, including credit card payments (the minimum monthly payments are used), car or other vehicle loans, student loans and any other installment or revolving debt, including any payments that are deferred. Owner builder loans are no different. Current residence mortgages or rent payments are generally not counted in the qualifying debts if you are building your new primary residence. Different loan programs allow varying levels of debt vs. monthly income. Please be prepared to discuss these issues with your owner builder loan representative.
   
   
4. Savings. Even with our owner builder loans that require no down payment, you must have a minimum level of savings (called "reserves"). You will typically need a minimum of 2 to 3 months worth of PITI (principal, interest, tax, and insurance) payments in savings. All savings must be "seasoned" for at least three months, meaning they must be in your personal bank account for 90 days (not a business account or someone else's account). Your reserves cannot be borrowed or given as a gift. Reserve requirements vary with loan program.
   
   
5. Down Payment: Will you be making a down payment? Do you already own land that can count towards a down payment? Some of our owner builder programs offer the ability to "roll in" closing costs; others require you to pay them at closing.
   

In addition to the above, it is a good idea to be familiar with:

• The price and value of the land you want to build on.
• The home plan or home size you want to build.
• The approximate "as-finished" value, based on area comparable sales of your new home (comprable typically means same size home within 1-3 miles of your lot).
• Whether you will do some, none or all of the work yourself as the owner builder.
• Any other questions or issues you may have.

Getting Qualified

Getting qualified before you apply for an owner builder loan can help you understand how much you can borrow, and therefore how much home you can build.

When building a house, you may get pre-qualified or pre-approved. You can typically get pre-qualified for our owner builder program over the phone in a few minutes.

A pre-qualification is not as beneficial as a pre-approval where you have to go through a more rigorous process which includes verification of your credit, income, assets and liabilities. It is highly recommended that, once you are serious about moving forward, you get pre-approved for an owner builder construction loan before you start looking for land and making a purchase offer.

Getting Pre-approved will help you:

• Find out the maximum loan you can afford as an owner builder (and therefore the maximum home you can build), so you don't waste time looking for properties and plans you cannot afford.
• Puts you in a stronger position when you are negotiating with the seller, because the seller knows that your owner builder loan is already approved.
• Helps you close more quickly, since your loan is already approved.

What's Next?

After you are pre-approved for owner builder financing, the real work begins. You will need to have your building plans finalized and your land under contract (or owned).

While you are working on your budget, you will also need to provide us with the following:

• The name/phone/fax of an appraiser that you will use. You will meet with the appraiser and give them your plans, specs and land information and a check for their fee. They will send the appraisal to us. Generally, we allow you to choose the appraiser for our owner builder loans.
• Once you have found the land and put it under contract, we will need a copy of the contract and the name/phone/fax of the attorney or closing agent that you want to use for closing. If you already own the land, we will need a copy of the deed and closing statement (HUD1) from when you bought it.
• You may also need to apply for your building permits prior to closing. All counties are different and you will have to check with your building department to find out what their process is and what documents you will need to apply as an owner builder. It is VERY important to contact your building department to determine their requirements for the building permit immediately upon securing your land contract, or even before you make your offer. Please speak with your owner builder loan representative for additional assistance.
• Prior to closing on your land, you will need to provide us with a complete breakdown of your building budget, based on the bids you received from suppliers and subcontractors.
• As an owner builder, you will also need to establish Course of Construction (sometimes called Builder's Risk) Insurance.  You may be able to get it through your current homeowner’s agent. If not, please let us know and we can refer you to someone who can provide this policy.

Start with Requesting More Owner Builder Information in order to speak with a representative. Within this info request form, you can also choose to have a free brochure sent to you, if desired.