Should You Consider Taking An Owner-Builder Construction Loans?

Owner-Builder Construction Loans

Many homeowners today either acquired their home through a home mortgage or hired a contractor to build their ideal homes. However, for some homeowners, they have taken the owner-builder route.

The owner-builder are those who build their own homes or doing the actual work or supervising the work. For most who have taken this route means saving money that should have gone to a contractor. For some, it is the satisfaction of living in a home that’s built by their own two hands.

If you are one of those who is decided to build their homes using the owner-builder route, you will have to consider a few things.

Determine Your Budget

Your allotted budget to build a home always takes an important role. Here are considerations when determining a working budget.

  1. Create a construction schedule
  2. All building materials – structural and finishing materials
  3. General labor costs – you will need an extra hand.
  4. Subcontractor fees
  5. Cost of preparing and clearing the lot area
  6. Cost for acquiring a building permit
  7. Cost for landscaping
  8. Cost for insurance premiums

All these costs will determine if you have enough working budget for the project from start to finish.

Consider an owner builder construction loan

After determining your budget and you think it is not enough to complete the house, you may want to look at the owner-builder construction loan. Talk to your bank or to financial institutions who specialize in owner-builder financing.

How to qualify for owner builder loans?

Just like any other loans, you will need to prepare all your financial documents and a business plan or project plan to support your loan.

The business plan should outline all projected budget from the cost of materials, labor costs, building permit fees, and all other costs related to the home building project. Include your construction schedule too. These requirements are a way for lenders to see if you are capable to pay the loan.