Hey everyone, TJ here with Sanctified Homes. Today, we're going to talk about the top three ways to finance your custom home. While there are many creative ways to finance a home build, these are the most common and effective methods. Whether you’re looking to work with a large-volume builder or a custom home builder, understanding these options will help you make an informed decision.

1. Turnkey Build

What is a Turnkey Build?

In a turnkey build, the builder finances the construction of your home. You don't have to worry about payments until the house is complete. Once the home is finished, you secure your end financing and take ownership. This method is common with large-volume builders like Vidian, Lennar, and Elden Homes.

Advantages of Turnkey Builds

• Convenience: The builder handles all the financing and construction processes.

• Simplicity: You only need to secure one loan at the end, simplifying your involvement in the financial process.

• Predictability: The total cost is often fixed upfront, reducing the risk of unexpected expenses.

Ideal For:

• First-time homebuyers who want a straightforward process.

• Homebuyers who prefer to avoid dealing with multiple loans and payments during construction.

2. Construction Loan

What is a Construction Loan?

With a construction loan, you go to the bank with your blueprints and a detailed cost estimate. The bank then lends you money to build your home, which you draw from as needed to pay subcontractors and for materials. Once the house is complete, you secure long-term financing.

Advantages of Construction Loans

• Control: You have more control over the construction process and payments.

• Customization: This option is flexible and allows for a more customized build.

• Potential Savings: By managing the budget closely, you might save money compared to a turnkey build.

Ideal For:

• Homebuyers who want a custom-built home.

• Those who have experience in managing construction projects or want to be more involved in the process.

3. Cash Option

What is the Cash Option?

If you have the funds available, you can finance your home build entirely with cash. This method involves paying for the construction as it progresses, often using a draw schedule managed by a title company to ensure proper payments and work completion.

Advantages of Cash Financing

• No Interest: Avoid the costs and complications of taking out a loan.

• Flexibility: Greater flexibility in managing and adjusting the budget.

• Simplified Process: Fewer legal and financial steps compared to loans.

Important Tips:

• Use a Title Company: To manage draws and payments, ensuring that funds are released only after work is completed satisfactorily.

• Inspect Work: Ensure that someone inspects the work regularly to confirm that it meets the agreed standards before releasing payments.

Ideal For:

• Individuals with sufficient funds to cover the entire cost of the build.

• Those who prefer to avoid the complexities of loan financing and interest payments.

Conclusion

Choosing the right financing method for your custom home build depends on your financial situation, experience, and personal preferences. Whether you opt for a turnkey build, a construction loan, or the cash option, each method has its unique advantages. It’s important to explore all your options and consult with multiple lenders to find the best terms for your project.

For more information on home building and financing, check out our detailed guides and resources at Sanctified Homes. If you have any questions or need further assistance, don’t hesitate to reach out. We're here to help you navigate the home building process smoothly and efficiently.

And as always, don’t forget to raise your standard! We'll talk to you soon.