Home Construction Loans (Part 2: Loan Terms)

Loans for Building a House

Simple House Building / September 19, 2019

A contractor looking over blueprints.If I were building my own house, my requirements would probably be simple: I want hallways about 50% bigger than you would think you would need and doorways a couple inches wider. One look at my current walls would tell you I’m a really bad driver of my own wheelchair.

That and automatic doors would be nice.

I do look at Pinterest, though, and I’m sure many of you have much more grand and imaginative ideas of what you would do given a blank canvas.

Building your own house comes with its own challenges. You have to know what your budget is, how to factor in various costs, and how to vet workers. If you get all this right, you can give yourself the custom home design you desire.

Know How Much You Can Afford

When we think about building a house on a budget, there’s a tendency to assume you’re trying to do something with limited funds. While that can be true, the budget can be much bigger as well.

While some will be able to pay cash to finance their own construction, getting a preapproval from a mortgage company can help determine how much you can afford to spend. Having a figure ahead of time will give you a guideline for your spending on the rest of the process.

You should also determine your priorities. The stakeholders in your home design include everyone who’s going to live there. Talk to everyone, including your children if they’re old enough, about what they would like to see in the new house. Odds are everyone will have different thoughts to pitch in, but this will give you a chance to make a list of everything you want and the importance of each item.

Costs to Factor In

There are many costs beyond materials to think about when it comes to building your own home.


One thing to consider is the land that you’re building on. If you have a flat plot, it should be cheaper to build on than building on any sort of slope. The architectural challenge is much higher in terms of making sure everything is level and safe. You don’t want to end up like these people.

Floor Plan

No matter how specific your vision of your house is, you’ll likely need the help of an architect or designer to draw up floor plans for an accurate rendering on a project the size of a new house.

The American Institute of Architects maintains an architect finder. You should try to interview a few to find one who really understands your vision for what you want done with your house. Be sure to fully articulate your goals.

When thinking about the floor plan, remember that if you have a lot of twists and turns and different layout requirements, it’ll likely cost more at the building stage because of increased time and labor.

Another factor is your square footage. Even if you can afford to build a bigger house, it will cost more to heat and cool. Don’t forget to take your monthly bills into consideration.

Before you hire the architect, ask to see their license documents so you can verify them. Each state has its own licensing system that you can find by looking online.


Unless you already have experience as a general contractor, you probably don’t want to be building the home yourself. Therefore, it’s necessary to hire the right person.

While it may be impossible to foresee everything that could potentially go wrong just by looking at architectural drawings, a good architect or contractor should be able to tell you some of the possible complications that might come up based on their past experience. Take advantage of this knowledge. There’s no such thing as a stupid question.

As with the architect, the contractor should be licensed. You’ll also want to verify their insurance in case something goes wrong. You can usually find that online.

When the job is complete, make sure the contractor does a final walk-through with you to make sure everything is completed as planned.


The materials used are a huge part of the cost. Hardwood or carpet? Aluminum or vinyl siding? What type of roof do you want?

You’re going to have to answer these and about a million other questions. Whatever you choose, make sure to itemize it in your budget so that you stay on track. Also, leave yourself some room to play within the budget. Building a house often costs more than you expect, and you want to make sure you have enough money to cover potential complications.

Another very important thing to remember is that you don’t have to do everything right now. Take countertops for example. Sure, you need them, but if your budget is a concern, you can always pick basic ones now and upgrade in a couple of years when you have the money.

Source: www.quickenloans.com