Building a home is an exciting journey, but proper preparation is key to ensuring a smooth process. Whether you’re considering a custom home or a new construction home in a planned community, knowing what you can afford and securing financing early will set you up for success. Here’s what you need to know before breaking ground.
Step 1: Determine Your Budget
Before choosing a builder or a floor plan, you need to know how much home you can afford. This involves:
✔️ Assessing Your Finances – Review your income, expenses, and savings to understand how much you can comfortably spend.
✔️ Checking Your Credit Score – A higher score can help you qualify for better mortgage rates.
✔️ Considering Additional Costs – Beyond construction, factor in land costs, permits, and upgrades.
👉 Source: Consumer Financial Protection Bureau – Mortgage Basics
Step 2: Get Pre-Approved for a Construction Loan
A pre-approval gives you a clear picture of your borrowing power and shows builders that you’re a serious buyer. Depending on the type of home you’re building, your loan options may include:
🔹 Construction-to-Permanent Loan – Covers the cost of construction and then converts into a traditional mortgage.
🔹 Lot Loans – If you’re buying land separately, this loan helps finance the purchase.
🔹 Builder Financing – Some builders offer financing options, but compare rates with outside lenders.
👉 Source: Federal Housing Administration – Construction Loans
Step 3: Decide Between a Custom or Pre-Designed Home
🏡 Custom Home – Gives you complete design control but requires working with an architect, finding a builder, and securing the right permits.
🏡 Production Home – Built by a developer in a planned community, offering a streamlined process with limited customization options.
Each choice has pros and cons, so consider your budget, timeline, and level of involvement before deciding.
Step 4: Research and Hire the Right Team
Building a home requires a skilled team, including:
✅ A reputable builder – Check reviews and tour previous projects.
✅ A lender experienced in construction loans – Not all lenders offer them.
✅ A real estate agent (optional) – Can help negotiate with builders and review contracts.
👉 Source: National Association of Home Builders – Finding a Builder
Step 5: Understand the Timeline
Building a home takes 6 to 12 months on average. Be prepared for delays due to weather, material shortages, or permit approvals.
Step 6: Prepare for Additional Costs
🔸 Upgrades & Customizations – Many builders charge extra for upgraded finishes.
🔸 Landscaping & Exterior Work – Not always included in builder packages.
🔸 Temporary Housing – If your lease ends before your home is finished, plan for short-term housing.
Ready to Build? Let’s Talk!
If you’re thinking about building, getting pre-approved is the first step. Let’s connect and go over your financing options!