Financing Your New Construction Home: A Guide for Evansville Buyers
Construction loans work differently than a typical mortgage. Here's what to know before you start.
Financing a new construction home works a little differently than financing an existing home. Understanding the basics before you start can save you from surprises partway through your build.
Construction Loans vs. Traditional Mortgages
Depending on your builder and lender, you may use a construction-to-permanent loan, which converts to a standard mortgage once the home is complete, or in some cases work with a builder who self-finances the build until closing, at which point you secure a traditional mortgage. Lucky for you at Sterchi Homes we make it totally simple and your loan starts at closing with your lender. Continue reading and learn more as some custom builds are going to require you to get a construction loan.
Getting Pre-Approved Early
Because new construction takes months to complete, it's worth getting pre-approved well before you sign a contract. This clarifies your budget for both the base home and any options, and prevents delays later in the process.
Locking Your Rate
Interest rates can move during a months-long build. Ask your lender about rate lock options and whether an extended or float-down lock makes sense given your expected completion timeline.
Working with a Builder's Preferred Lender
Many builders have relationships with local lenders who are familiar with new construction timelines, draw schedules, and appraisal processes specific to homes that don't exist yet. This familiarity can smooth out a process that might otherwise trip up a lender unfamiliar with new builds.
Why This Matters
- Construction Loans vs. Traditional Mortgages: Depending on your builder and lender, you may use a construction-to-permanent loan, which converts to a standard mortgage once the home is complete, or in some cases work with a builder who self-finances the build until closing, at which point you secure a traditional mortgage.
- Getting Pre-Approved Early: Because new construction takes months to complete, it's worth getting pre-approved well before you sign a contract.
- Working with a Builder's Preferred Lender: Many builders have relationships with local lenders who are familiar with new construction timelines, draw schedules, and appraisal processes specific to homes that don't exist yet.
Financing doesn't have to be the confusing part of building a home. Sterchi Homes works with local lenders experienced in new construction and can help connect Evansville-area buyers with financing that fits their build timeline.
Want an introduction to lenders who know new construction? Browse our neighborhoods or see available homes.
