How to buy a house that hasn’t been built yet

Here’s how to get started if you decide to build a home.

FINDING A CONSTRUCTION LOAN

“It all starts with your ability to be financed and what kind of budget can you establish from there,” says Dan Moralez, regional vice president for Northpointe Bank in Holland, Mich.

There’s no easy way to find a construction lender. Ask for referrals from friends and family. Builders often have lenders they recommend.

LOCKING IN THE LAND

Getting a place to build a house is a major part of the homebuilding process.

QUALIFYING, THE DOWN PAYMENT

Typical down payments are around 10 per- cent. Federal Housing Administration, Veterans Affairs and U.S. Department of Agriculture mortgage programs back construction loans.

USING A BUILDER OR DIY

There are two kinds of builders: custom builders and “production builders,” who construct a high volume of similar homes and work for maximum efficiency. Want to build your own home? “More and more often, we’re saying no,” Moralez says.

STAYING WITHIN BUDGET

Research the costs of the materials upfront to help avoid making significant and expensive modifications along the way. — Nerdwallet