True Owner/Builder loan programs will allow clients to build their project without having to hire a general contractor to do all the work. Operating as an Owner Builder (O/B) can give the client more actual control over their project as well as potentially offering them the opportunity to save contractor overhead and profit.
There are a number of Owner/Builder programs available. However, from the lender’s perspective, the more construction experience that you can bring to the project, the easier it will be for lender to give you the go ahead.
There are some lenders who will do an O/B loan only if the client is a licensed General Contractor who makes his living building homes. On the other hand there are O/B programs that do not require that a general contractor’s license be involved at all. And then there are a number of programs that fit within those extremes. Any lender offering O/B financing will be concerned whether or not the client will have sufficient experience to successfully build and complete the project in a timely fashion and within budget. In addition to these concerns the lender will be concerned as to whether or not the client will have sufficient TIME to do their building project while still maintaining their required income. They will be looking at your current job requirements for time and availability and your physical distance (both living and working) from your project.
We have a number of programs that will work as a O/B loans if the client is willing to hire a general contractor to work as a Site Supervisor. THIS is a significant opportunity for clients to save a majority of the fees and profits general contractors will normally charge.
Because pricing for construction loans is set in part based upon risk and lenders tend to be risk averse we need to stress that the more experience you can show that you will be bringing to your project, the easier it will be for a lender to say “Yes”, and the lower your costs and fees will be.
There are restrictions in the use of this program. Generally speaking, Construction To Perm (CTP) lenders will not allow a client to be an owner builder unless they are a licensed general contractor working as a general contractor or the client will be using a general contractor as a site supervisor on their project. The requirements vary considerably from lender to lender. This is one of the issues we look at when choosing potential lenders for our clients.
If you are interested in being an Owner/Builder under any of these scenarios, please give us a call so we can discuss your scenario, experience and loan options (800) 688-2494.