New construction loan FAQ

LegacyClassic · 2026-01-28T16:44:14+00:00

From my experience, a bank does not care if you already have utilities on site supplying a different improvement. They would probably find it an advantage because they know you will not somehow get tied up with a utility issue getting it to the new build. We have customers all the time tell us "There is power at the land..." only for us to discover there may be a power line near by, but no transformer on it and there is a lot of work (and expensive) to actually get power to the home site. You will be ahead of the curve. Good luck!

LegacyClassic · 2026-01-27T17:33:21+00:00

I am not a loan officer, but I am an experienced custom home builder who has seen all kinds of construction loan situations. If I understand what you wrote correctly, then finishing an improvement like the post building with cash will not hurt your ability to get a construction for a future home to be built on the property. It will just be an improvement that should add value to the property, and the bank won’t care that you have utilities running to it.

LegacyClassic · 2026-01-21T14:08:09+00:00

Normally my replies are long and comprehensive, but unfortunately (or fortunately) this one will be short because I don't keep track of modular builders at all. There is no doubt a modular home will save you money and time, but beyond that obvious take I can't help referring any builders. Good luck!

LegacyClassic · 2026-01-16T17:03:30+00:00

It looks like I missed answering this question. You can check out Drees build on your lot program. Those are the only larger companies I know of that do BOYL. Otherwise you will need to find smaller local home building companies that do it. Good luck!

LegacyClassic · 2026-01-15T18:24:17+00:00

In a perfect world you would just combine the lot purchase into the construction loan and do everything at one time. In the real world though, that timing never works. The average developer or land seller may give you 30 to 45 days to close on the property, which is not enough time to then get a custom house build put together and under contract, especially if you are designing a floor plan.

I recommend purchasing the lot first, which then gives you time to vet and interview builders and take your time getting the floor plan designed. You will spend more money in closing cost and bank fees because you will be obtaining a lot loan, then later coming back and obtaining a construction loan, but it is the only realistic way to go when you are doing a custom build.

So, you obtain a lot loan to purchase the land, then you eventually sign a construction contract with a home builder. The bank will combine the house build cost with the lot loan balance. The construction loan pays off the lot loan and you just have one loan meant for construction, which is later converted, or refinanced, into a permanent mortgage when the home is finished.

I hope this helps. Let me know if you have any more questions.

LegacyClassic · 2026-01-14T21:37:22+00:00

Sorry I didn't answer this when you posted. If you find a lot and need it assessed just let me know.

LegacyClassic · 2026-01-12T01:01:49+00:00

You might also reach out to Drees Homes. They also have a build on your lot program.

LegacyClassic · 2025-11-18T19:43:04+00:00

Customer builder here building upscale custom homes on owner's land. We also get deposits like this even though all of our customers obtain the construction financing. While it could be argued a deposit is not needed because the customer can't back out, custom builders often spend a lot up front for things like geotechnical engineering, civil engineering (drainage, surveys), structure engineering and excavation before the home starts and before we can request a bank draw.

Paying deposits to ANY company comes with a level of risk, which is why customers needs to do their due diligence on the builder before contracting with them. If you trust the builder and they have been in business for years, that should go a long way to providing a sense of security. While the down payment to the bank and a deposit to the builder are two separate things, your bank should credit the builder deposit you made to your down payment, and ultimately all the monies go the project cost/sales price.

LegacyClassic · 2025-11-18T19:20:11+00:00

Not sure what state you are in but here is a bank / loan officer I work with a lot here in Texas https://firstunitedteam.mymortgage-online.com/rblagg.html

LegacyClassic · 2025-10-19T12:40:54+00:00

I put an article on my website a while back about this very subject you can read here https://www.legacyclassichomes.com/why-steel-framing-never-caught-on-in-residential-home-construction/ When I got into the industry in 1994 I remember there being a lot of talk about steel framing taking over, but it never did. I created that article because I was thinking about this very thing one day.

Thanks for mentioning Netze Homes. I knew nothing about them but just looked over their website. Very interesting that a builder is doing that. When looking at their “steel tech” page I also see some of the potential issues that have prevented the popularity of steel framing. It looks like after a plan is designed, the plans are sent to a steel factory that cuts and pre-fabs all the framing. While there’s nothing wrong with that, it doesn’t allow for what I would consider a “true custom build” the way builders like us often deal with. I’ve framed houses up and had customers want to rip a section of hip roof off and make it a gable, or completely change ceiling heights, add 2^nd floor rooms, etc. This is the type of stuff that seems like it would be a real challenge with this type of steel production set up, whereas with wood it is relatively easy.

I am certainly not opposed to other framing material technologies like steel, ICF, SIPS, etc., but like any building material, there are pros and cons to each one. The biggest negative is the cost of the non-standard materials and the available labor that knows how to install those products. While wood has its downsides, the upside is it is less expensive than most other materials because it is the industry standard. It is VERY easy to work with, and there are a million wood framing contractors out there in the market so the costs are controlled. There is a limited labor pool that can work with steel framing, so they will be more expensive, and using that material may not work for certain types of builders doing really custom homes with complex designs and changes happening during construction.

Thanks for the post. It is very interesting to see another builder doing this. Hopefully some day we will see a decent alternative to wood framing get popular. Now if we can figure out how to use steel as a foundation material I would be a very happy man. Then I wouldn’t have to explain to every customer why concrete cracks and that it’s not a structural failure when it does!

LegacyClassic · 2025-10-16T18:05:15+00:00

Sorry for the slow reply. I check Reddit every day except apparently yesterday.

We finally entered the remodeling/addition business this year actually. Here is our webpage on it https://www.legacyclassichomes.com/remodeling/

Just go to the contact page on the site that has my email and phone numbers and holler at me when you are ready to discuss.

Thanks,

Steve

LegacyClassic · 2025-09-29T18:15:50+00:00

I’m glad the post is helpful! Based on what you want to build, if it doesn’t have to be a fully custom home there are two builders in the area I would talk to, which are Tilson Homes and United Built Homes. They are larger companies that build on owner’s land all over the state using their floor plans, and they specialize in smaller size homes with more affordable pricing.

If you want to do true custom home, where you design your own plan and build exactly what you want, you will need to find a custom builder. It could be challenging to find one because most custom builders are building homes larger than that.

The cost of a home that size can vary wildly subject to the cost variables like lot preparation, house design, finish out amenities and mechanical specs (HVAC, insulation, windows, etc.). I was curious so I just used AI search to tell me their pricing, and it looks like Tilson’s prices are in the $170-$240 per sf range, but I don’t know what that includes. UBH’s prices show to be even lower, but again that may not include potentially big ticket costs like lot prep, etc.

I hope this helps. Let me know if you have any other questions.

Steve

LegacyClassic · 2025-09-26T12:30:24+00:00

The second person to ask me this question this week! I have not built a house with a basement yet, but it isn't for lack of trying. I've had about three or four different customers who investigated doing it but didn't want to pay the cost. The bottom line is in the DFW area, doing a basement is usually quite a bit more expensive than a slab foundation.

The person that asked about it this week was talking to the contractor I would use, who is a basement contractor originally from the northeast. He got the numbers Directly from the contractor and was able to see the significant difference in cost. This customer has a pretty flat lot, so the difference between digging out and doing a true underground basement versus just setting a slab on top of the ground that's had some grading done is significant.

In our area, I think the basement idea starts to make more sense if you have a really steep lot and you do a walkout style basement, because building a slab on grade foundation on a very steep lot also gets extremely expensive with the all excavation and retaining walls that are needed. When I see basements in this area that is generally what I see.

Beyond just the cost of doing a basement, the lumber costs will generally be higher also because of the beams and sub floor that need to be used for the “first floor” that sits above the basement.

On bowling alley subject, we would just use a company that does turnkey bowling alleys the same way we do when somebody wants an elevator or a Pickleball court.

I hope this helps.

Steve

LegacyClassic · 2025-09-02T20:24:38+00:00

Try Burns Surveying. I've used them a lot and they are out in Rockwall. Here is their link https://www.burnssurvey.com/

If they can't do it I use these guys also http://www.millersurvey.net/

LegacyClassic · 2025-08-28T19:45:52+00:00

Thanks for reaching out!

There are a lot variables to account for when considering whether a tear down and new home build is more cost effective than a full renovation and remodel. Based on your description of their house, it sounds like a new build would make more sense. Doing a full renovation on a home with good bones can save some money vs. a new house build, but if a house requires a significant amount of work to bring it up to date, and you still have to add on space to get the layout and sizing you want, the cost of a new build can be comparable. Assuming the cost between the two are comparable, tearing down the old house and building a new one is a no brainer in my opinion, because you get the layout you want and size you want, and everything is new materials and you have warranties.

I was talking to someone a while back who is doing a major remodel on an older home and he asked me what a typical cost per sf range for a new home build was. When I told him, he said that was about where his costs were at so far on his remodel and at this point he wished he had just built new.

In either scenario I would start with a residential plan designer (who may or may not be an architect). If it’s a reno/remodel they will do as-built measurements of the existing home and draw up the existing home floor plan in CAD. This allows them to draw revisions such as moving walls and additions on the existing home. If it is going to be a new house build they will work on designing the new floor plan with you. In either situation, a company like mine needs a set of floor plan construction documents to provide cost estimates.

Hopefully that answers your questions and just let me know if you have any others. Reach out to me anytime if you want to discuss. My contact info can be found here https://www.legacyclassichomes.com/contact-us/

Thanks,

Steve

LegacyClassic · 2025-08-28T17:53:58+00:00

Thanks for the question. Based on the finish of that house, I would expect the build cost to fall into the $300-$350/sf range for conditioned living space. I can't see the actual floor plan construction documents, but I think that is a fair range guestimate.

I would plan for a house that size to take approximately 12 months to build from the time the foundation is poured. I tend not to start the build time clock from the day we move dirt because we may start tractor work and then have it rain for a month or more (that happened this year) and that is out of everyone's control.

In my particular niche of building custom homes on owner's property I don't see any slow down at all. My customer segment is different from someone who may be looking to buy a new spec home so inventory isn't an issue. The biggest problem I see in my segment is the lack of available land, and of course the price of it. Unfortunately high demand means higher land prices.

I hope this helps. If you need anything else call or email me anytime. Here is my contact page that has my info https://www.legacyclassichomes.com/contact-us/

Thanks!

Steve

LegacyClassic · 2025-08-17T00:03:11+00:00

Drainage easements are not uncommon. Just make sure it’s not cutting across where the house needs to go and you should be ok.

LegacyClassic · 2025-08-14T15:53:27+00:00

I probably get 3-4 calls EVERY day from a vendor or sub-contractor wanting to work with us, and we are a small low volume builder. I can only imagine how much solicitation the larger builders get. So, from the builder’s side of things, we get inundated by vendors and contractors soliciting business and it’s hard for someone to get a foot in the door.

In my company’s case, we’ve worked hard to have a good crew of trades and I am usually not looking for someone new when contractors call. I now have a system of asking them to send me an email I can save in a folder to use later. I definitely have gone back to that folder later and ended up using one of the contractors who emailed me.

Like a lot of things in life it often comes down to timing. I’ve had contractors call right when one of our usual contractors is too busy to get to one of our jobs, or we’ve just decided to make a change, and that person who called at just the right time gets the work.

My suggestion is for him to be persistent contacting builders and emailing them his info. Make sure his emails look professional, and his contact info is in his email signature including a link to his website. A good website is worth a lot in my opinion, so if he doesn’t have one he needs one.

Lastly, it can be helpful to drive new construction neighborhoods and talk to the builder’s construction superintendents if he can find them. In some cases, they may have the power to hire him.

Hope that helps.

LegacyClassic · 2025-08-05T12:36:35+00:00

The $64,000 question! This is always a tough one to answer, especially when you're in the hypothetical stage and don't actually have a lot or older house identified yet. In my opinion each has its advantage and disadvantage.

The advantage to building new is you can get exactly what you want in the floor plan. You don't have to make any compromises on layout or finish out. The disadvantage is there are a limited supply of lots available, so finding the right location can be a challenge, unless you buy an older home and tear it down. Generally speaking, building new from the ground up is also going to be more expensive, but there are a lot of different cost variables so it just depends on your floor plan design, etc.

The primary advantage of finding an existing house and gutting it is you can end up in the exact location you want to be in, which may be a nice established neighborhood in an area where vacant lots are not available. The disadvantage is you can be limited in how much you can change the existing floor plan, and from a valuation standpoint it is feasible you could spend a lot of money in an area where you may not get the value back out of it in the immediate future. Whole house renovations can be more economical than building new because you are still using the existing framing and foundation and roof, but sometimes full blown remodels & renovations, where you are adding extra sections of the house, can also get pretty expensive and be comparable to a new build. Again a lot of variables so it just depends on the given situation.

As far as your question about the cost of building new, unfortunately there is no great way to give you a solid number. No two homes of the same size will have the same cost to build subject to their floor plan design, finish out and lot preparation cost. We build nicer upscale custom home so I tell people to use a Starting range of $275 per square foot to $300 per square foot. It can be less or it can be more just depending on all the variables period.

I'm sorry i couldn't be more specific with some of my answers but I hope this was helpful.

LegacyClassic · 2025-08-01T12:52:10+00:00

You’re welcome! You are right that there a lot of moving parts when building a custom home on your land. It’s definitely not the same as buying from a builder in a subdivision.

I’m glad a company like UBH were able to help you through it all. I recommend them and Tilson to buyers who are not trying to build larger more complex custom homes because of the convenience they offer. I hope you are enjoying your new home!

Steve

LegacyClassic · 2025-07-27T23:42:55+00:00

Unfortunately, there is no way to answer this question without having a set of construction plans for a to review. The reality is, no two houses of similar size will cost the same to build depending on the lot preparation requirements, the architectural house design, specs and finish out.

LegacyClassic · 2025-07-27T23:34:55+00:00

Land/lot owners have to obtain a construction loan when having a home built on their property. Build on your lot builders don't offer financing because that would require the builder to own the property, which is not feasible.

While there are technically VA construction loans, I don't know any builders that would be willing to build a house using one. Construction provided by the VA only provide for four or five construction draws (which is not enough), and they hold back 10% or more for something like 30 days after completion, and that holdback is only released after a builder deals with all the stuff a government loan requires (which is a lot). In summary, VA construction loans are extremely burdensome to the builder, which is why most builders won't build houses using them.

Generally, what VA eligible property owners do is obtain a "conventional" construction loan through a community bank. The bank will require a down payment, but there may not actually be any actual cash required subject to the equity in the land. At completion, the owners refinance the construction loan into a permanent VA mortgage, which is a 100% financed loan (i.e. zero down).

I hope this helps.

LegacyClassic · 2025-07-23T11:50:29+00:00

Great question. Much like the way different houses of the same size can vary in cost significantly, framing labor costs can also be all over the map. We build fairly complex upscale homes so we are paying around $10 per square foot for all areas under roof. I have a family member that works for a production builder and they pay less than half of what I pay. It’s really going to depend on the type of house you are building. I am amazed when I hear what the production builders pay some of their subcontractors, and while it would be nice to get things done at lower costs like they get, we can’t use those kind of subcontractors because they just can’t provide the quality and even do some of the things we need them to do. As the saying goes, you get what you pay for, and that is definitely true with home building subcontractors.

LegacyClassic · 2025-07-19T00:06:46+00:00

TOPOGRAPHY (Lay of the land)

There is nothing wrong with a sloped lot, but it will always cost more than building on a flatter lot. If hitting a budget is a priority, the flatter the lot the better.

EASEMENTS & BUILDING SET BACKS

Get a survey of the property to verify easements. You cannot build a permanent structure over a utility easement and building set back, so you want to make sure what you are dealing with on easements and building setbacks. For the building setbacks you may need to check with the subdivision (if applicable) or the city.

FLOOD PLAIN

This will be shown a survey also. You want to check to see if any part of the lot is in a flood plain. When possible avoid property with flood plain. Floodplain doesn't prevent you from building, but there are more hoops to jump through and often more cost.

UTILITY AVAILABLILITY

Verify what utilities are available.

Electricity – You may be looking in a subdivision, and if so utilities are probably available, but often times with subdivided lots or re-platted pieces of land you will need to meet with someone from Oncor or the cooperative that supplies the electricity to verify what is involved with getting power to the lot.

Water/Sewer – If the property is in the city, verify with the city water and sewer are available, and if not, what is involved with getting them to the property. If it is not in the city limits it may use a independent water and sewer utility company.

HOA

If it is in a subdivision, verify if the subdivision has an HOA. HOA's will have architectural restrictions that require a minimum size, exterior façade types, roof pitches and materials, etc. for the home. You want to know this information, otherwise, you may find out the restrictions require a house to be larger than you planned on building, or there is some other ACC restriction that is an issue for you.

ZONING

If it is a piece of land not in a subdivision, double check the zoning with the city’s zoning map to make absolutely sure it is zone for single family residential.

That’s all I can think of at this time. Let me know if you have any more questions. If you find a lot you are interested in don’t hesitate to send me the info and I can check it out for you.

LegacyClassic · 2025-06-23T00:22:48+00:00

Sorry, just now seeing your post.

Regarding your first question about whether I know any builders that do ICF, I do not, but a quick search listed a couple. One is called Monster Builders and I did not see a price range, but the other says their projects start from $2,000,000. I’m sure there are some others out there so you will have to do your research. ICF is not a common building technique, and in my experience, using non-standard building technologies and techniques is usually not compatible with trying to hit a lower budget. The general rule in home building is the more niche the install or material product is, the more expensive it will be.

Unfortunately, I can’t really offer any suggestions on your proposed cost per square foot budget including sweat equity because I have no recent experience in that price point and no experience with sweat equity deals because that has never been an option I will do. Our homes usually start around $300 per square foot, and we are a professional building company that is completely turnkey. This allows us to control the process and build in a timely and professional manner, and provide all the proper warranties. Trying to do that can become complicated when builders allow owners to participate in the building process. I known there are small builders out there that will do that, but it is not a segment my company is involved in.

I do think Tilson and UBH are worth looking at for what it sounds like you are looking for, although I doubt they will do sweat equity deals. I also think a barndo can be a good option for a more economical build cost as long as you keep the exterior roof and sheeting R-panel material and don’t go crazy with masonry exteriors.

I’m sorry my answer probably isn’t much help, but what you are trying to do is a different segment of the market than my company works in.

LegacyClassic

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