How can you obtain 100% Financing on your True Built Home?

Many clients are almost shocked to find out that you can obtain 100% financing for a new True Built Home. Although lending policies have changed, there are still local Banks who are willing to offer this incredible program. How so?

No doubt as you have shopped around for a new home you have noticed that homes generally follow a value base on sq. footage of the home, location and or lot size. This value in the banking business is what they called appraised value. The appraised value, or the worth that a bank is willing to lend on the home, often determines its selling value. The value of a home therefore comes down to a dollar amount per sq. foot. Some areas you might see $150.00 a sq. ft while others might be over $200.00 dollars +.  Check your area out now. Simply put in an address of a home in the area your land is and see what per sq. averages are going for. This is why lenders see such great value in a True Built Home.

The main factor for a bank to loan money is LTV or loan-to-value ratio. The better the ratio, the more attractive the loan is to the bank.  Here is an example:

Say you are interested in the True Built Home Baniff Bay. The price per sq. foot starts at about $50.00 for 2306 sq. ft or $113,900. (All values have been rounded up) Let’s assume you want to add some value by upgrading to a heat pump and a few ginger bread things like round corners and skylights. Let’s say your price before tax is $129,000. Plus tax of around $11,000 brings the home to a total of $140,000. Now the price of your land may vary but let’s just say $100,000 for your lot. Add in the development cost of say $40,000. Things like site improvement, permits, painting and decks etc. Your total cost $280,000. Divide that by the sq. footage and your get $121.00 a sq. foot. Even if your home appraises on the low side of say $150.00 a sq. ft that gives you an appraised value of $345,000, or about 23%, walk in equity. That equals instant equity of $64,000. However, if it appraises for an average of $175 per sq ft. that’s $403,000 or 40% walk in equity! That’s a brand new home, with walk in equity.

Now the lender takes the pre-construction appraisal and bases the amount of how much they are going to give you for the construction project on that appraisal and your credit score. With a credit score of 720 you can get you up to 95% of the appraisal, below 620 and the amount can goes as low as 80%, but at $340,000 all you would need is an 85% of value. Ideally you want 80%. Why, because if you can do 80% of appraisal, you can avoid PMI insurance. That might be another $200.00 a month.

If you thought home ownership was out of reach or you needed a large amount of money to buy a home. Think again. Think True Built Home. Contact one of our lenders now.