What is a Construction Loan?
Buying your dream house requires a mortgage, but building your dream house? Well, that requires a mortgage with a twist.
Construction loans are shorter term, higher interest rate loans that cover the cost of building or rehabilitating a house. The lender pays a construction loan to the contractor — not the borrower — in installments as building milestones are achieved. Once building is complete, home construction loans are either converted to permanent mortgages or paid in full.
What do I Need to Qualify?
As with traditional mortgages, minimum credit scores, maximum debt-to-income ratios and down payment requirements vary from lender to lender and are usually based on the amount of money borrowed.
Fintech Mortgage Association will review your:
- Debt-to-income ratio: Lenders generally expect your debts to total no more than 45% of your income, and lower is better
- Credit score: Most construction loan lenders require a credit score of 680 or higher
- Down payment:A 20% to 30% down payment is typically required for new construction, but some renovation loan programs may allow less
- Repayment plan:With a construction-only loan, the lender might want to know if you’ll pay the balance in cash or refinance when building is complete
The Fintech Mortgage Association Experience
At Fintech Mortgage Association you can expect transparency and open communication, a knowledgeable team of industry experts and a customer-centric team working together to make your home buying experience effortless and exciting. We are fast and efficient, closing most of our purchase loans in 30 days or less.
Fintech Mortgage Association will offer the right loan tailored to you (VA, FHA, Conv, Jumbo and much more). Contact us for more information on your mortgage loan needs.
Any questions? Our Loan Officers would love to answer any of your questions on our conventional loans and get you pre-qualified today! Try our 1 minute Quick Qualify App. Discover Your Score HERE