Owner Builder Construction Loans

Many banks and mortgage companies are not owner builder friendly for construction financing.  As a result, construction loans for OWNER BUILDER CONSTRUCTION LOANS” are nearly impossible to find.  We are a private money lender and look at each owner builder construction loan and make a determination based on the merits of the specific loan request.  You do not have to be a licensed building contractor for an owner builder construction loan as long as you build the house with a valid building permit and comply with all general building codes.  The owner builder serves as the general contractor on their own project.


Owner builder construction loans are even more elusive in a bad economy.  However, we understand that an owner builder has a very personal interest in building their own home in order to save a substantial amount of money on labor while creating instant equity.  Many estimates indicate that an owner builder can save up to 40% of the price of a house if they build it themselves.  In addition to the savings created by building the home themselves, these homeowners also have the satisfaction of building their own home and making certain it is done correctly and to their satisfaction.  With the savings created by owner building, the homeowner will also have a lower payment due to a smaller mortgage.


Our owner builder construction loan guidelines are similar to those for private money construction loans.  We require no prepayment penalty, will lend up to 65% loan to value, we will consider cross collateral, have an easy application process with no upfront fees and have terms available of up to 24 months.  It is recommended that the owner builder does not break ground before the construction loan has closed escrow.  We can make exceptions to this on a case by case basis.


Often an owner has a mortgage on the property being financed.  In this event, we may ask that the existing financing be subordinated to the new owner builder construction loan.  This means the existing lender will become a second mortgage on the property being financed with the construction loan, instead of their existing first mortgage position.  There may be exceptions to this requirement, which will be determined after a review of the loan request.


An owner builder serving as their own general contractor requires some education and research on the subject.  We recommend the owner builder consult with someone in the field to get an understanding of how a project works from beginning to end.  It is recommended that the owner builder provide us with a business plan, which is to include a projected budget that lists labor, cost of materials, building permits and any additional costs associated with their project. We have a team of lenders, investors and contractors with years of construction experience who can assist you with the budget numbers and  help you figure out the entire costs of the project and how long construction should take to complete the job.


The owner builder will need to ensure that all subcontractors are reputable and guarantee their work. It is suggested that the owner builder should request to see previous projects and ask for references.  You may also want to see if any complaints have been filed through local building authorities.  The owner builder should establish regular visits and meetings with the subcontractors to be sure the project is kept on schedule.  If the owner builder determines they are not comfortable managing the construction project, it is recommended they hire a general contractor.

Please contact us today to begin the process to build the home of your dreams.

Beau Eckstein 800.570.6584