I was told at workshop that if you are going to build a new construction hone you have to secure funds and have the builder build the house first but in the webinars and in workbook it appears that is considered the wrong way to go about it. I guess I’m confused as to if it’s okay to go through with the building company to build the house and then have NACA finance that home. Anyone with experience or any information?
The contractor will not get paid upfront through the naca process. General construction usually requires a down payment of up to about 50% prior to construction. These are essentially funds the contractor uses to buy the supplies. The remaining balance can be viewed as the cost of services and labor.
When buying a house in a new development for example the contractor has already secured funds to build the house/development from their bank. If you want to design and build a house on a piece of land that is not part of a new development then you would need to go about it one of these 2 ways:
-Find a contractor that has funds available or the ability to secure a loan to gain the funds and is OK with getting paid 100% after closing. These are usually larger companies that have access to that kind of capital.
-Finance the down payment yourself (potentially up to 50% build cost). If you need to take out a loan in order to do this then the loan must be paid off prior to closing on the house…you might be able to roll it over into your mortgage? Assuming your mortgage is probably nowhere near your maximum approved limit.
While it is possible to do this @ttrumble has mentioned previously something along the lines of he has never seen this done before. I would imagine if you have the ability to buy half a house in cash or secure a loan with no issues and pay it off in a matter of months then you would probably not have naca or any other program on your radar.
But to your question, people buy new construction homes through naca all the time and even recently there have been some posters on this forum taking that route.
This reply was modified 1 year, 3 months ago by Nelsont.