You’ve decided to build on your lot—congratulations! Now, the work begins. To help you prepare your application and walk through the construction loan process, we’ve compiled some helpful tips below.
1. Determine your budget
We maximize your construction financing because we allow the land you’re building on—rather than only the dwelling value—to be used as equity toward your down payment. With Rural 1st, you get the most value from your property.
2. Choose your builder
Our loans don’t require you to use a specific builder, but we do have a list of requirements your chosen builder must meet to ensure your construction project goes as smoothly as possible. We recommend you get at least three bids from local builders and check their references to make sure you find the right team for the job. Your Rural 1st loan officer can also give you recommendations for builders we’ve worked with in the past.
3. Create a construction timeline
Together with your builder, create a detailed timeline. Making sure everything is accounted for at the beginning of the project can prevent surprise delays and budget issues later on. We offer a one-time close, and you can take up to one year to complete your build.*
4. Gather appraisal materials
We’ll need a few things from you to order an appraisal:
Sets of blueprints (full or partial) and interior and exterior drawings with dimensions and elevation views of your project
A final budget with complete cost breakdown and a contract from your builder
Specs that include all components for a complete project
Make sure the budget from your builder includes all final costs and accounts for overruns—changes after this point will require additional approval. Your Rural 1st Loan Officer can help you determine how much cash reserves you should have on-hand.
5. Prepare for closing
As you prepare to close on your construction loan, you will need to provide verification of your builder’s risk insurance or your prepaid homeowners insurance policy. If you’ve paid funds prior to closing towards the project, we would need to document those funds with receipts and have lien waivers signed. As a final step, gather contact information for your builder and whoever will be handling their draws.
When you partner with Rural 1st, we can help guide you through the home building process. Even if you’re already working with a builder, we can partner with you to provide additional guidance and insights.
*Time starts at closing date. At one year, additional fees may apply. Speak to a loan officer for more information.