Understanding Idaho Construction Loans
Our loans for residential construction at Summit Lending offer greater flexibility and more builder-friendly terms than traditional mortgages. Use our construction loan calculator above to calculate your construction loan rates in Idaho.
What Makes Construction Loans Different?
Unlike traditional home loans, construction loans release funding in stages. As a borrower, you would likely be responsible only for the drawn funds’ interest until your property is completed.
Idaho Construction Loans With One Closing vs. Two Closings
One-Loan Option:
The one-construction-loan option combines your new construction loan for your Idaho residence with your permanent mortgage to form one loan. This approach will allow you to solidify your interest rate in the beginning.
Pros:
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One set of home closing costs
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Greater financial predictability due to setting the interest rate before beginning construction
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A streamlined process due to having a single application and closing
Cons:
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Less flexibility when it comes to changing lenders or terms once construction begins
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Possibly higher initial interest rate compared with the two-time option
Two-Loan Option:
The two-loan option involves two loans covering the following: (1) your home’s construction phase, and (2) your permanent mortgage. With the two loans come two closings.
Pros:
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Flexibility to search for more personally favorable construction loan interest rates in Idaho down the road
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The potential for a lower interest rate for your permanent mortgage if the market evolves
Cons:
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Having to complete the approval process and pay closing costs two times
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Risk of failing to qualify for permanent home financing.
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Volatility in the interest rate
Calculate Idaho Loans For Residential Construction
Calculating the funding you need to build your dream home requires multiple steps:
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Create your budget: Develop a comprehensive construction budget in collaboration with a builder, considering contingencies, permits, labor, and materials.
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Obtain an appraisal: Secure a home value appraisal since a lender will require this to offer you a loan.
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Figuring out your loan to value: Determine this ratio since a lender will usually offer you financing based on a specific percentage of your construction costs or home’s appraised value, whichever is lower, and then require you to pay money down to cover the difference.
Let’s say $300,000 is your estimated construction cost and $400,000 is your appraised home value following construction. Your lender may offer you 80% financing, meaning they would give you a loan as high as $240,000.
Steps For Acquiring Idaho Construction Loans
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Strengthen Your Finances: Your lender will likely view your residential construction loan as high risk since your house won’t exist initially. You must have a strong credit score and ratio of debt to earnings to meet their requirements.
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Pick a Contractor: Select a reputable and expert builder. Your lender will probably have to approve who you choose.
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Create a Blueprint: Produce a comprehensive architectural plan to go with your construction budget.
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Explore Rates: Touch base with Summit Lending to review construction loan rates in Idaho.
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Start Underwriting: Provide your financial details, appraisal, blueprints, and construction budget for construction loan consideration.
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Complete the Loan Process: Finalizing your loan will occur once or twice depending on the type of loan you select.
Decreasing Your Monthly Mortgage Payments
Consider the following to decrease your payments each month during and following construction:
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Submit a larger down payment.
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Choose a longer mortgage term.
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Shop around for the most competitive interest rate.
Collaborate With Summit Lending
At Summit Lending, we view new construction loans as an excellent solution for building custom homes across Idaho. We will gladly help you carefully choose the right loan and lender for the best construction loan rates in Idaho. Get in touch with us to start successfully navigating the process of selecting Idaho construction loans today.
