What to Know About Down Payments for Construction Home Loans

This blog was provided by our expert finance partners at Pulte Mortgage™.

Understanding the down payment for new construction loan requirements is vital for successfully financing your new construction home. Whether you're considering a 5%, 10%, or no-money-down construction loan payment option, knowing your choices and working closely with your lender can help you make the best financial decision. 

Summary:

• How Much Money Down for Construction Loans Do You Need? 

• New Construction Loan Down Payment Options

  • 10 Percent Down Construction Loan

  • 5 Percent Down Construction Loan

  • No Money Down Construction Loan

• When Is the Down Payment for Construction Loans Due?

• Down Payment for Construction Loans Conclusion

How Much Money Down for Construction Loans Do You Need?

The down payment required for new construction home loans can vary significantly. Typically, lenders ask for a down payment between 5% and 20% of the total loan amount. A larger down payment often results in better loan terms and lower interest rates, but carefully considering how much you can afford upfront is essential.

New Construction Loan Down Payment Options

10 Percent Down Construction Home Loan

A 10% down payment is a common requirement for many construction home loans. This option strikes a balance between manageable upfront costs and reasonable monthly payments. For many borrowers, a construction loan with 10 percent down is a feasible option that still offers access to necessary funds for other financial priorities.

5 Percent Down Construction Home Loan

Some home loans offer options with a 5% down payment. This can be an attractive option if you’re looking to minimize your initial out-of-pocket expense. However, be aware that loans with lower down payments might come with stricter qualifying criteria. Be sure you carefully review these terms to help ensure they align with your financial situation.

No Money Down Construction Home Loan

Zero-down construction loans are quite rare, but some loan programs do allow for no down payment. For example, Veterans Affairs (VA) home loans offer the option to purchase a home with no down payment if the sale price is less than the home's appraised value. This benefit is available to qualifying current and former U.S. military members, the National Guard, the Reserve, and the unmarried widows of service members.

When Is the Down Payment for a Construction Home Loan Due?

The down payment for a new construction home loan is typically required at the closing table. That means you need to have your funds ready by the time you finalize your home purchase. Be sure to confirm the exact timing with your loan team to help avoid any last-minute financial stress.

Down Payment for Construction Loans Conclusion

By preparing in advance and exploring all available options, you can ensure a smoother financing process for your new construction home. If you have any questions or need further guidance, consulting with a Pulte Mortgage Financing Advisor can provide personalized insights and help you navigate the complexities of new construction home loans more effectively. 

Explore new construction homes today or browse more Pulte® blogs.

Written By: Meagan Rochard, Financial Services Writer 

Last Updated: 12/31/24