BlogHomebuying February 18 2021

How to Get a New Construction Loan

There's nothing quite like dreaming up a brand new home built just for you—the lovely lot, the perfect floor plan, the finishes and touches that make it uniquely yours.

But before you get swept away choosing appliance packages and landscaping options, hold on! You'll need to get your mortgage approval process started first, and with a new home, there are just a few differences in the process.

Here's what you need to know and how to prepare to get a new construction loan rolling.

Step One: Determine what kind of loan you need

If you're building or buying a new home, there are two main types of loans you'll encounter:

A construction loan is used to finance the building of a property. For example, if you wanted to buy the raw materials to build your own house, you might take out a construction loan.

A home loan for new construction is when you borrow money to buy a home from a builder.

If your dream home will be part of an existing development with a single builder, you have a distinct advantage—the builder will often help you arrange financing. This can be an enormous benefit because their affiliated lending team works in sync with all the other arms of the builder's process, creating a seamless, turnkey experience for the buyer that's very comparable to the lending process for buying a pre-existing home.

If you are building a custom home, you'll need to secure a construction loan. A construction loan is often paired with lot financing loans. Most new home construction loans provide short-term funds designed to get you through the building stage of your project followed by a conversion into a permanent long-term loan of 30 or 15 years.

Step Two: Meet with a lender

If your new home will be in an existing development that offers turnkey services, meet with their affiliated lending team first to discuss available products and loan options as well as other services. Their team can help you determine how ready you are to purchase, what preparations you'll need to apply for approval, and give you an idea of how much home you can afford.

Step Three: Check up on your credit

Improving your credit score can help you secure different types of loans and better interest rates, so it's well worth taking the time to review and make a plan before jumping in with an offer. You can check your score on your own through the three major credit bureaus: Experian, Equifax, and TransUnion. Be sure to give yourself a little time to make any corrections, payments, or banking changes that can help boost your score.

Some lenders offer help from credit specialists to get potential borrowers in the best possible shape for their mortgage loan applications. If your lender offers this service, take them up on it! Credit specialists can scan your credit for any blips and blemishes that can impact your overall score, and help you create a plan to address any missteps.

Step Four: Get pre-approval

Your lending team will walk you through the process of securing a pre-approval letter, which will allow you to determine exactly how much of a loan you qualify for, and what the terms of that loan will be. You'll need to provide proof of all income, such as pay stubs, as well as tax and bank documents. All of this information helps the lender determine the best type of loan for you as well as how much you can comfortably afford, and this information will help you ultimately determine your budget for your new home.

Once you walk through these steps and have a pre-approval letter in hand, you're ready to move ahead with a clear financial picture and peace of mind.

The specialists at Lennar Mortgage can help you understand your financial position and finance your dream home by finding the best loan products for your individual situation. Let us help you get started on the path to homeownership today.

Search Results for query

February 22 2022

NAMMBA Connect Tour 2022 - Sponsored by Lennar Mortgage

Lennar Mortgage is proud to sponsor NAMMBA Connect Tour 2022.

Read More

January 05 2022

How to Prep Your Home When Heading on Winter Vacation

For peace of mind when you're gone on a winter trip, here a few simple tricks and tips you can use to get your home vacation-ready.

Read More

December 14 2021

FHA Loan Limits Increase for 2022

Check out how the FHA is making things easier for those hoping to buy a home in 2022.

Read More

November 10 2021

Pet-Friendly Remodeling Ideas

Here are a few ideas for making some pet-friendly changes to our homes to make them more fun, friendly and comfortable for our furry friends.

Read More

November 03 2021

Fall Garden Cleanup Checklist

Find out which chores to skip, which are must-dos, and how to keep your garden looking beautiful in the fall.

Read More

October 27 2021

Should You Buy a Home with Cash?

Paying upfront instead of obtaining financing is often seen as a way of getting a leg up on other potential buyers. But is it always the best idea? And why is it so common

Read More

October 19 2021

5 Ways to Make Your Offer Stand Out in a Tight Housing Market

With huge buyer demand and a shrinking inventory, this market means you'll need to be strategic, creative, and prepared in order to buy your dream house.

Read More

October 12 2021

Should I Buy a Home with an HOA?

In the excitement of buying a new home, it can be easy to overlook the presence of a Homeowners' Association, or HOA. But an HOA can have a lot of influence over your purchase choice, including your monthly payment, the money you need to set aside for...

Read More

October 04 2021

14 Brilliant Ideas for Decorating Your Porch This Fall

Simple and inexpensive solutions for a cozy, colorful porch that says "welcome."

Read More


Mortgage Calculators

Crunch the Numbers With Our Helpful Mortgage Calculators

Payment Calculator

payment calculator


Affordability Calculator

affordability calculator


Refinance Calculator

refinance calculator


The Modern Digital Mortgage with a Personal Touch

Paperless. Effortless. Awesomeness TM

Simplify the home financing process with our Digital Mortgage. We'll be here to help navigate you through the entire process.

Get Pre-qualifiedWhat is a Digital Mortgage?