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

April 15 2021

How to Get a Mortgage When You're Self-Employed

Here are a few things you need to consider to land the best possible mortgage when you're self-employed.

Read More

April 07 2021

3 Surprising Refinancing Mistakes

When refinancing, be careful to avoid some pitfalls and traps that could cost you money in the long run. Here are some of the most common mistakes people make when they rush to refinance.

Read More

March 31 2021

10 Unexpected Spring-Cleaning Tips

Keep your home in the best possible shape with these surprising life hacks.

Read More

March 23 2021

Tax Season Tips for Homeowners

If you're a new homeowner, you might be wondering how homeownership affects your taxes. The answer is: It depends on one big thing—will you be itemizing your deductions or claiming the standard deduction?

Read More

March 11 2021

A Virtual Homebuying Helper: Lennar Homebuying Seminars

Online webinars are making it easier than ever to help buyers get educated and take the first steps toward their dream of homeownership.

Read More

March 04 2021

What is Mortgage Insurance?

Mortgage insurance may seem like just one more painful added expense when considering buying a home and how much you can afford. And it's true, private mortgage insurance, or PMI, does increase your monthly payment

Read More

February 25 2021

What to Expect on your Path to Homeownership

Our Digital Mortgage Experience is a modern mortgage application with a personal touch! We’ve designed our Digital Mortgage experience to make things easy, intuitive, and efficient; which gives us the ability to be with you through the entire process- from...

Read More

February 18 2021

How to Get a New Construction Loan

Tips and steps for buying a new-construction home.

Read More

February 11 2021

What's In Your Monthly Mortgage Payment?

Understanding Mortgage Insurance, Escrow, and Supplemental Home Costs

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?