Ways to secure a construction loan without a general contractor
Construction Loan Basics
Construction loans can be used to finance the purchase of land, the construction of a new home, or the renovation of an existing home. Construction loans are typically short-term loans, lasting for a period of one to three years. During this time, the borrower makes interest-only payments. Once the construction is complete, the construction loan is rolled over into a conventional mortgage.
In some states, it is required to have an actual licensed General Contractor in order to secure financing from a bank, but there are ways around this.
Certain Banks are more accepting when it comes to Construction Loans
If one bank says no, try another. Not all banks have the same rules they have to follow.
In our Bootstrap Builders Program, we have a whole mini course dedicated to helping you get a Construction Loan, and it includes a list of banks in each state who are known to lend to owner-builders WITHOUT a GC on record.
If you find an amenable lender, please let me know so I can update this list and help others!
Where there’s a will there’s a way
Take a Course
Banks want to know they can count on the project being successful. They think that only a builder knows how to build a house. To show them you are dedicated and determined to see the project through, you can take a course about home building. Our Bootstrap Builders Program provides everything you need to be your own GC and manage a construction project with a step-by-step process, and video guidance for each step to help you stay on schedule and avoid pitfalls. At the end of the program, you’ll get a certificate to include in your loan application.
Friend or family
Do you know a licensed contractor who could be the contractor on record as far as the bank is concerned? If so, start there and let them know that you would be doing all the work and assuming all the responsibility and liability, including carrying insurance. It often doesn’t need to be a person licensed as a General Contractor. Some banks will accept even licensed plumbers or electricians as the contractor on record.
Hire a Consultant
Sometimes a GC will consult on a project for a fee. Many builders will charge between $3,000 and $5,000 for their service as a construction consultant. This will still amount a to huge savings for you. Keep in mind a consultant does not replace the liability that a GC takes on. This is still your responsibility lenders will ask that you carry your own insurance and liability on the project. Check with your lender to see if this option would work. However, with our Bootstrap Builders Program, we believe you can get a loan without needing to do this and we’ll show you how!
Enlist a Company
Finally, there are companies who are set up to basically go on record as the GC for the bank. The fee is usually about 3%. Still much better than 25-35%! However, with our Bootstrap Builders Program, we believe you can get a loan without needing to do this and we’ll show you how!
When all else fails
I can’t imagine NONE of these options working, but if that’s the case, you can skip the bank financing and fund your build another way such as funding from your own savings/sale of previous home, family loans, take it slow and pay as you go, build in phases, etc.
Don’t give up
Remember: Everything is figureoutable!
Being a self-contractor is extra work, but if you’re willing to put in some effort and time, you could build over $110,000 (25-35%) in equity while making your dreams come true!
Join our Bootstrap Builders Program and learn HOW to be your own builder and save 6 figures (25-35%) on your home build!
Here’s a few comments from others who have done this!
If you’re interested self-contracting check out these posts:
For those of you who are new to my page, Hello! I’m Jessica, wife to Cody, and mom to 2 boys and a girl, who are SO lucky because everyday with me is like an episode of carpool karaoke! They get a ride and a show! (OK, so I’m not a great singer, but do have enthusiasm). I have a background in architecture and designed this home that we just built in a small Texas town. We self-contracted the build, and now I’m working on a guide to help other families do the same! Most days you can find me on Instagram @the.old.barn