Use these general guidelines to help understand how much cash you’ll need if you plan to build a custom home! Remember, these are general ‘rule of thumb’ guidelines. We’ve also written a post on How To Budget For a Custom Home. For actual figures, please consult with a lender. Here is a list of our preferred lenders.
|Land Purchase||10%–25% of the land purchase price|
|Construction Loan||10%-20% of Appraised Value of Home||The lender will order a pre-construction appraisal to determine the projected value of the home once completed. Your loan amount and cash requirements will be determined by the appraisal value and the lenders Loan to Value policies. Typically, cash contributed at time of the land purchase will be applied toward the cash required for the construction loan.|
|Preconstruction Design Costs||Architect plans, soil testing, engineering, builder deposit, designer fees,||Assume $8 per Sq. Ft. Example: 4,500 Sq. Ft. home = $36,000 Typically, these pre-paid costs will be applied toward the cash required for the construction loan.|
|Construction Loan Payments||Interest payments during construction||Assume 6% interest only payments for 7-9 months during construction. Remember that initially the loan balance and payements will be small but they will grow as the project progresses.|
|Post-Construction Expenses||Landscaping, furniture, blinds, decor **optional**||These are discretionary and can be included in your loan if you plan ahead for them. If not, plan to pay cash for these items.|