How do I apply for a construction loan?
"If you wish to apply for a construction loan or you would simply like more information regarding our loan products, please call 800-543-5600. We have licensed loan originators who would be happy to assist you in submitting an application. If you are a broker wishing to submit an application on behalf of a borrower, please contact us and request a Broker Kit if you are not yet already registered with us."
Which states do you lend in?
"We are currently providing loans in Arizona, Colorado, and Michigan!"
Do I have to use my money before I can get a construction draw?
"Once you have satisfied the initial equity requirement, you will NOT need to expense any additional funds of your own in order to request a construction draw. When you order a draw check, you simply need to email, mail, or fax to us a completed Draw Request Form. We will then mail you a check made payable to you. You will deposit the check into your personal checking account and pay your contractors and suppliers. If you do use your own money to advance construction, the construction loan can reimburse you as long as you continue to meet the equity requirement."
How many times can I ask for a draw?
"As many as you like. We offer UNLIMITED draws and there are ZERO draw fees."
In the event of cost over-runs, can I get an increase?
"Initially, an allowance for cost overruns is budgeted into the loan but if an increase is still needed, you are able to apply for a loan increase."
Can the loan start construction and I finish it later with my own funds?
"No. The construction loan must complete construction. Any money you intend to use for construction must be used prior to the disbursement of construction loan funds."
Can the loan finish construction that has already been started?
"Yes. Our construction loan can complete work which has been started but if you have already borrowed money to advance construction, you will need to apply for a construction loan which is sufficient to both pay off any existing loans and complete construction."
What are your interest rates?
"Our loans carry a variable interest rate which is tied to the Wall Street Journal’s Prime Rate. The interest rate you are charged is the sum of the Wall Street Journal’s Prime Rate plus a fixed margin rate which is based on your middle FICO credit score. Should the Prime Rate change, your rate will also change at the same time and in the same amount. A minimum score of 700 is required unless you are a veteran or have additional collateral to pledge. Please call 800-543-5600 for further information."
Is this an interest only construction loan?
"Yes. Although you are able to make payments toward the principal during the loan term, you are only required to pay the interest each month which has accrued on the total amount drawn from the loan. Any real estate taxes will need to be paid directly by you."
How much of a down payment do I need to qualify?
"The minimum amount of equity the borrower needs to have invested into the project prior to funding is 20% of the total cost of the project (land costs plus construction costs). Any money you have already paid out of pocket toward the land and/or construction will be applied to the down payment (equity) requirement."
What kinds of construction loans do you offer?
"We offer short-term construction loans for conventional framed homes, log homes, timber frame homes, and kit homes. You can build a home for your own use or you can build a rental property. You can hire a contractor or you can act as your own contractor."
Are inspections required for every draw?
"No. During the loan, the construction will be inspected at the completion of every four line items on the building budget or as approximately each 20% increment of the loan is paid out, whichever comes first. You will never be charged for a Progress Inspection. Owner Builder Loans, LLC will order and pay for ALL Progress Inspections!"
How long is the loan?
"The term of the construction loan is 12-months and there is no pre-payment penalty. Should you need additional time to complete your home or refinance, 3-month extensions are available to those who qualify."
Can the cost of the land be paid from the construction loan?
"In most cases, as long as the amount of equity you have in the project is equal to at least 20% of the total cost of the project (land costs plus construction costs), then the loan can pay off the balance of the land. The borrower however, can not have less than 20% of an equity stake in the project at any time."
What is your loan-to-value percentage?
"The highest allowable is 75%"
What is the minimum and maximum loan amount I can apply for?
"The minimum allowable loan amount is $10,000.00.The maximum allowable loan amount is $400,000.00*. Higher loan amounts are considered on a case by case basis."
Do I need to be pre-qualified for a permanent loan prior to the construction loan?
"It is not required of all loans. Each loan scenario is unique and we may request that you obtain a pre-approval for an end-loan."
Do I need to hire a licensed contractor?
"No. You do not need to hire a licensed contractor, project manager, and you do not need to be licensed yourself! This is truly an owner builder construction loan. If you are capable and willing to do the work, we empower you to do so!"
What our clients tell us
“When we couldn't find the house we wanted, we decided to build it ourselves. After learning about the loan program, I recognized a great opportunity and grabbed it. It has been a wild ride with more highs and lows than a roller coaster. High marks to Cathy at Owner Builder Loans. She answers all our questions and keeps the checks coming right on time. We have been able to pay contractors immediately and motivate them to complete projects more promptly.”
Owner Builders, D.T. and K.T.
Bay City, MI