New Home Construction Loans
Build the home of your dreams with a new home construction loan.
From the location, interior layout, and exterior design, the options are endless. TFNB Your Bank for Life wants to help you build the home of your dreams. We offer new home construction loans to finance building your custom house.
Ready to break ground? Connect with a TFNB lending professional using the form below.
How construction loans work
Many people take out construction loans to finance their custom homes. These are short-term loans, usually for a term of one year. Unlike a personal loan or home mortgage, construction loans are paid in installments as work on the home progresses.
Depending on the term of the loan, you may only pay the interest during construction. Once the home is built, you can refinance the construction loan into a long-term mortgage.
What potential homeowners need to know
An important thing to remember with a construction loan is that interest rates will vary. These rates change based on national rate trends. That means the rate you pay in the beginning of the loan term may not be the rate you pay at the end. Also, you should expect interest rates to be higher than a traditional mortgage. That’s because a construction loan is unsecured. When you are approved for a mortgage, your home acts as collateral. As a result, the lender can more confidently loan funds. Banks see new home construction as a bigger risk.
Construction loans aren’t just for labor costs and building materials. When designing your new home, expect the loan to also cover:
- Grass and landscaping costs for the property
- Upgraded countertops and drawer handles
- Light fixtures
- Household appliances
- And more
How to qualify and receive funds
For a lender to approve your new home construction loan, you often need to submit a construction plan. This lays out the homebuilder’s timeline, building schedule, and project budget. The homebuilder you choose to work with also needs to provide a “draw schedule.” This is an estimated schedule that outlines when they will need new draws on funding. These draws usually come in stages as each part of the construction project finishes. For example, draws may come after buying the land, pouring the foundation, and constructing the frame.
A bank representative may visit the construction site after each phase. They will review and document progress before issuing the next draw.
New home construction loans for Waco and McGregor
If you are ready to build your dream home in Central Texas, choose TFNB. Our lending services have helped build Waco-area homes for generations. With our local connections, we have a deep understanding of what it takes to build a home in Waco, McGregor, and surrounding areas.
Whether you choose to buy or build, we can help. When you’re ready to talk about available financing options, reach out to a member of our team. Visit us at one of our four locations or send us a message below.
Questions about home construction loans? We can help!
Fill out the form below and a member of our team will reach out to you.
