Show Me the Money: Ways to Finance Your New Construction Home in Los Angeles

Los Angeles. It’s fun, it’s beautiful, and it’s expensive. The average cost to build a new home can range from $200 – $450 per square foot, depending on the type and size of the property. With such high costs, homeowners should prioritize finding ways to budget for and finance their new construction home. Here are some ideas and recommendations for making sure your dream home is in financial reach.

FHA Loan

First-time homeowners may be in luck with an FHA loan. FHA construction-to-permanent loans are administered through the federal government and are reserved for people building homes from scratch. These loans are a combination of a short-term construction loan to cover the home’s construction and a standard mortgage that continues after the home has been built. FHA construction-to-permanent loans generally require a 10% down payment and a 500 minimum credit score.

VA Loan

Veterans Affairs (VA) loans are exclusive to active and former military members and their families. With VA construction loans, you may not be required to make a down payment or pay private mortgage insurance. Like an FHA loan, a VA loan is disbursed incrementally so you won’t have to pay upfront. You’ll need to meet all of the qualifications for a standard VA loan, as well as some additional ones that include securing a VA-approved homebuilder and submitting construction plans for approval.

Private bank construction loan

For most people, taking out a loan from a private lending institution or bank is the best way to finance their new construction home. Much like other types of loans, you’ll need to meet the criteria and file an application. Generally speaking, construction loans have stricter requirements and higher interest rates as compared to conventional mortgages on existing homes.

So many ways to pay for your dream home

The home building process can be daunting, but you have several options for financing your new construction. At Creative Innovation Developers, we’ll be with you from start to finish to ensure you get a custom home you love at a price you can afford.