Ground Up Construction
Ground up Construction Loan Benefits & How They Work
Ground-up construction loans (also called construction-to-permanent loans) finance the construction of a new home from scratch, often including land acquisition, materials, labor, and related costs. These differ from renovation loans (which fund improvements to existing properties).
Reasons to Finance a New Home Build
Building your own home from the ground up provides several strong advantages compared to buying an existing house. These benefits come from having complete control over the design, materials, and features, resulting in a home that is perfectly customized to your lifestyle and preferences
When building a new home, you realize several key benefits:
Ground Up Construction Loan Process
Learn more about the process to build a home to manage expectations with your builder, realtor, etc.
Pre-Approval
Complete loan application with Scout Advisors and work with your real estate broker to purchase land (if you haven't already purchased)
Select Builder
Work with an architect to finish plans, solicit quotes from general contractor and select your builder
Builder Approval
Work with your Scout Advisors mortgage expert to compile the necessary documents to submit your builder package for approval
Project Approval
After obtaining builder approval submit the building plans for approval (budget & building plans)
Submit Loan / Obtain Approval
Submit loan, order appraisal, obtain title, clear underwriting conditions & obtain loan approval
Start Construction
The lender will oversee the construcion process and will review all aspects of the build (managing timelines, administering draws to the builder, inspections, etc)
Construction Completion
Upon obtaining the certificate of completion and final inspection will be perfomed by an appraiser
Loan Modification
You will sign the final loan documents and the final draw will be released to your builder. Any leftover construction money will be credited to your loan, which converts to a 30-year fixed rate loan
Ground Up Construction Loan Programs
We offer several mortgages to help you build your home. Have additional questions? Reach out to your Scout Advisors loan officer.
Apply For A Ground Up Construction Loan
A ground up construction loan is a single closing construction loan to build a new home. The construction loan provides short-term financing that modifies into permanent financing once the construction is complete. This loan can be used to acquire land or the loan can be restructured as a refinance if you already own the land.
It typically takes 60 to 75 days to obtain loan approval. There are 3 main steps including: Builder approval, project approval and loan approval. Learn more about the process by exploring the product specific loan (conventional, FHA and VA).
Owner builders are only allowed on conventional loans and they must obtain builder approval, which involves an experience requirement, positive reviews from past clients and building suppliers. There are a number of contingencies added such as higher down payment and potentially a higher rate and terms.
Yes. The loan proceeds can be used to pay off any loans you acquired to purchase the land.
Technically yes. You can build a barndominium or a unique property (log cabin / geodesic dome, container home), provided there are recent comparable sales in the area?
No. Land with an existing home is ineligible for a ground up construction loan. If possible, the land may be subdivided from the existing structure to permit loan eligilibility.
If you purchased anything outside of closing you cannot be reimbursed. However, the money you paid can be used as a credit toward the down payment of the home.
