Is there a loan officer you're looking to apply with?

Please create an account to get started!

Please choose your loan advisor:

Pros of getting a construction loan with a local lender

There are a lot of decisions to make when you’re ready to build your new home. Setting your budget, finding a home plan, deciding on the area to build in, and much more.

You’ll also have to pick where you’d like to get your construction loan from. We can all name a few of the national mortgage companies – but what about the hometown lenders? What advantages can they offer against the giant loan companies?

Smaller down payment
Most large lenders and banks require a hefty down payment. And it makes a lot of sense when you consider there’s no physical collateral backing up the loan. It’s not like the bank can sell your house to recoup their losses if you aren’t able to make payments. That’s why a home construction loan is considered risker than a loan to purchase an existing house. Most banks need up to 20 – 30% down payment.

Smaller lenders have a lot more flexibility when it comes to down payments for construction loans.

Mann Mortgage’s construction programs have down payments that are far less than what big lenders offer. You can get a construction loan with 5% down for a conventional loan, 0% for VA loan, and 3.5% for USDA loan. This makes home construction a possibility for far more people.

Better relationship with local builders
Large lenders can give you the funds for your build, but can they recommend builders? Can they give you advice on what areas are the most coveted in the community? Have any of your local builders worked with them before? Probably not.

When you work with a smaller hometown lender, they have spent years (even decades) in your community. Some, like Mann Mortgage, will even recommend a builder for your project. Mann Mortgage’s branch locations have approved builders they’ve worked with in the past. For these builders, they already know how they’ll get payments, who to ask if they have questions, and they may already have a relationship with your lender – it’s a more comfortable and easy relationship for everyone involved.

Quick mortgage answers
Every lending institution offers customer service and a number to call if you have questions. But large lenders often don’t have a dedicated loan officer assigned to each customer. You can get assistance, but you’ll have to call a customer service line to talk to a random representative.

Small lenders, like Mann Mortgage, have one dedicated loan officer available for you through the entire loan process. You’ll have their direct line, office number, email, and sometimes even their mobile phone for text and calls. The benefit? Faster response times, less anxiety, quicker answers, and a better guarantee you’ll close on time.

Homes for Heroes: Helping certain professionals with homeownership

Buying a home is an exciting, stressful, and emotional experience. If you’re a teacher, nurse, healthcare worker, law enforcement officer, firefighter, military member, or veteran, there are programs to help you make homeownership a little easier. It’s called Homes for Heroes. Since 2002, they’ve helped more than 44,000 people with their homeownership goals.

Homes for Heroes, Inc.
Homes for Heroes is a for-profit company that works with affiliate real estate agents, home lenders, title companies, and home inspectors. They say their mission is to, “provide extraordinary savings to heroes who provide extraordinary services to our nation and its communities every day.”

Eligible participants can receive thousands of dollars in refunds when they work with the program and use the affiliate real estate companies. It’s a good program for home buyers who qualify as there is no catch to it. The organization is able to fund itself through fees paid by the real estate professionals who take part in the program. It’s basically a paid referral program that benefits a select group of home buyers and owners.

Homes for Heroes Foundation
It’s the non-profit side of the company. Homes for Heroes, Inc. donates a portion of its earnings to support the foundation. The foundation then uses those funds (and private donations) to give “Hero Grants” to nonprofit charities that serve heroes in need. From 2009 to 2020, they awarded $842,838 in grants.

A lot of professionals are eligible
Whether you’re a current or former professional, you will likely qualify if your career is listed below. Other types of careers are eligible as well, so speak with your local home lender if your profession is similar to any listed below:

  • Firefighter
  • Paramedic
  • EMT
  • Law enforcement
  • First responder
  • Active military
  • Nurse
  • Doctor
  • Health care professional
  • Educator
  • School administrator

It’s an easy program to use
You can ask your real estate agent or home town lender whether they’re part of the Homes for Heroes program. If they are, they’ll work with you to make you meet the eligibility requirements and all paperwork is completed for you. The more Homes for Heroes-approved professionals you work with, the bigger the refund you’ll receive.

Conforming loan limits for 2021

When applying for a mortgage, one of the most popular options is a conforming loan. These loans are called “conforming” because they conform to the guidelines set by Fannie Mae and Freddie Mac, federally backed home mortgage companies created by the U.S. Congress to boost homeownership.

What do Fannie Mae and Freddie Mac Do?
These entities exist only to support the U.S. mortgage system. They don’t originate loans. Instead, after a loan has been issued, one of the entities will buy the loan from the lender if it meets their criteria. This is an important part of the mortgage market because it allows lenders to sell loans to Fannie Mae and Freddie Mac and use the cash raised to engage in further lending.

For a loan to be purchased by Fannie Mae or Freddie Mac, the borrower generally needs:

  • A good credit score
  • A debt-to-income ratio of 50% or less
  • At least 3% down payment
  • A loan amount of less than conforming loan limit

2021 conforming loan limits
Each year, the Federal Housing Agency decides what the conforming loan limit is. As houses become more expensive, the limits are increased. In 2021, the amount increased for all units.

2021 Conforming Loan Limits
UnitsBase LimitHigh-Cost Limit
One$548,250$822,375
Two$702,000$1,053,000
Three$848,500$1,272,750
Four$1,054,500$1,581,750

­­

Base limit: This is the maximum loan amount for homes in most areas of the United States.

High-cost limit: This is the maximum loan amount for homes in high-cost markets such as parts of Alaska, Hawaii, California, and Washington, D.C.

Units: The number of housing units per building.

More >> See what the conforming loan limit is where you live.

Because conforming loans can be re-sold, they’re not as risky for lenders and often have favorable terms for borrowers. Savvy home buyers will keep their loan amount within the conforming loan limits so they have an easier time securing their loan, they’ll have more relaxed requirements, and their rates will probably be better.

If you’re looking for a conventional 15 or 30-year loan (as most people are), you may want to consider keeping the loan amount under the loan limit in order for it to be a conforming loan.

When you need a bigger loan – consider a jumbo loan
If the limits won’t get you a home you’re interested in buying, you could look into a jumbo loan. Jumbo loans won’t be purchased by Fannie Mae or Freddie Mac, so they don’t need to conform to their loan limits – meaning you can get more money. If you have a strong credit score and low debt-to-income ratio, you may find a lender willing to extend one to you.

However, they come with some disadvantages. Jumbo loans have stricter qualification rules, require a sizable down payment (sometimes 20% or more), and normally have a higher interest rate. For those reasons, a lot of homebuyers try to avoid them by finding a home that will keep them within the conforming loan limits.

To see whether you’ll be eligible for a conforming home loan, contact your local Mann Mortgage home lender. Together, they’ll help you crunch the numbers to see what type of loan would be best for you.

Can you get down payment assistance for your new home?

First, let’s bust a common down payment assistance myth: it’s not just for lower income home buyers. There are hundreds of down payment assistance programs offered across the country for all types of buyers. Many programs are from communities that want to spur construction or homeownership in a particular area.

It’s always a good idea to look into these programs regardless of how much money you have saved.

Do you have to pay back the funds?
Not always. It depends on the program you use.

Do you have to be a first-time home buyer to qualify?
No. Many programs are available to people regardless of how many times they have purchased a home in the past.

Are the programs hard to qualify for?
Not at all. Some are available to everyone and others have light restrictions.

For those with restrictions, most people still qualify since they have lax income and credit score requirements. As example, you may need to make equal to or less than 115% of the median income for the county in which you live. That means if the median income is $100,000, people who make up to $115,000 qualify. The credit score requirements vary between programs too, but it’s common to need at least 620 (the average FICO score for Americans in 2020 was 711).

For down payment assistance programs to spur homeownership in select areas, there may not be any qualifications beyond living or building in the select area.

Does it matter which type of loan you have?
VA and USDA loans don’t require down payments anyway, so any additional funds you put towards the purchase of your home will help reduce your mortgage amount. Conventional and FHA loans do require a down payment, so the programs will help you qualify for these loans.

How can you find whether there’s a program you can use?
As we mentioned, there are literally hundreds of down payment assistance programs across the country. A state may have a handful of programs but a city’s metro area may have ten times more. The best way to comb through all the programs is to talk to your local home lender. Unlike national mortgage companies, your local lenders know incredibly specific programs available only through your community that will save you thousands of dollars. Contact your local lender and get details on which down payment assistance programs you can use.

Get Started in Less Than 10 Minutes

Get pre-approved with our online mortgage application. It’s simple, fast & secure!