Financing a Custom Home Build?

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Is anyone familiar with the process for financing a custom home build? 

I'm interested in buying property and then building a small custom house on the property.

Let's assume the numbers work out to something like this-

  • $150k for property
  • $350k for design, construction of custom house

What portions of the $500k would I be able to finance and how would I do so?

Thanks!

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You can finance both land and construction cost through a construction loan. I've documented my recent experience here.

I was able to find a builder who would finance his own build (he bought the lot, and financed the build). We put down earnest money, but it beat having the carry the interest expense while he built it. It also incentivized him to finish the damn house, instead of taking forever -- since he was paying that interest every month.

ryoung81 said:   I was able to find a builder who would finance his own build (he bought the lot, and financed the build). We put down earnest money, but it beat having the carry the interest expense while he built it. It also incentivized him to finish the damn house, instead of taking forever -- since he was paying that interest every month.


True....but I'm sure that interest cost was built into the price you paid. It still makes life a lot easier for you, however.

rascott said:   
ryoung81 said:   I was able to find a builder who would finance his own build (he bought the lot, and financed the build). We put down earnest money, but it beat having the carry the interest expense while he built it. It also incentivized him to finish the damn house, instead of taking forever -- since he was paying that interest every month.


True....but I'm sure that interest cost was built into the price you paid. It still makes life a lot easier for you, however.

  Of course it was built in, but the builder would have been the one on the hook for excess months of interest payments if there had been any delays.



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