FINANCING A NEW HOME

A construction loan is specifically designed for the financing of building of a home. The loan covers the costs of land acquisition and the construction of the home. During construction of the home, the loan is structured to make periodic payment disbursements to cover the cost to build. When construction is complete, the loan then converts to a permanent mortgage. At this point, scheduled monthly payments of principal and interest plus escrows, if applicable, will take effect.

Brighton Homes is proud to partner with Bank of Utah as our preferred lender.

FREQUENTLY ASKED QUESTIONS

Who pays the construction loan fees?
Any loan fees on the construction fees are paid by Brighton Homes. However, since the loan is in the borrower’s name, the borrower can claim the tax deduction for any applicable fees. (Please consult a tax advisor with questions.)

Do I make payments on my construction loan during home construction?
No, payments are taken out of an interest reserve account. However, since the loan is in the borrower’s name, the borrower can claim the tax deduction for any applicable fees. (Please consult a tax advisor with questions.)

How are construction loan funds distributed?
Funds for a construction loan aren’t disbursed at one time; rather, funds are disbursed after Brighton Homes submits a draw request to Bank of Utah. Bank of Utah then sends out a home inspector to verify the items requested to be paid are completed.

What is the minimum credit score for a construction loan?
Generally, a 680 FICO credit score or above is required; however, each transaction is unique. Contact a loan officer to discuss a specific scenario.

How much money does a construction home loan require for a down payment?
The amount down varies based on house price, credit, and long term loan program, among other things.  However, as a general guide, a down payment as low as 5% is required for homes under $445,000.  Additionally, the standard down payment is 10%, with a larger amount required for highly customized, larger homes.  Please contact a sales agent for more information on earnest money, down payments, and flexible payment plans.

Should the construction loan be in the name of the buyer or the builder?
There are many advantages to having a construction loan in the name of the buyer. These advantages include less risk, more control, and potential tax advantages. Additionally, Brighton Homes offers a financial incentive to place the loan in the buyer’s name. Please contact a sales agent for more information on incentives.

What type of long-term mortgage loans are compatible with home construction loans?
Most long-term home loan financing programs allow the borrower to pay off a home construction loan. These include VA loans, first-time home buyer loans, jumbo loans, conventional loans, FHA loans and others.

What information is needed to start the process for a construction loan?

Typical required documentation

  • Copy of Driver’s License for all borrowers
  • 1 Month of Paystubs for all borrowers (if applicable)
  • All pages of the last 2 Years Personal Tax Returns with W-2s, 1099, schedules, attachments, etc.
    • If self-employed and have business tax returns, all pages of the last 2 years of company tax returns are needed.
  • 2 Months of Any Asset Accounts that will be considered. (i.e bank accounts, retirement accounts, mutual funds, etc.)

You are not required to use Bank of Utah’s services as a condition to purchasing a Brighton home and are free to select the lender of your choice.