What do You Need for an Owner Builder Loan?


Hello, constant reader, and welcome back to our blog! If you have been keeping up with our recent posts, you are aware fo the fact that we are going over as many details as possible as they relate to owner builder construction loans. In previous posts, we have gone over a general overview of these loans, the benefits and downfalls, and what these loans are good for. In today’s post, to conclude our small story arc, we are going to go over exactly what a person has to do in order to obtain a loan of this type. If you haven’t read our previous posts, we suggest you go back and do so now, however, if you want to read this post first you should be able to digest the information without.


Take These Steps To Secure an Owner Builder Loan


Construction loans given to owner builders are often difficult to obtain due to factors such as the economy and the risk taken on by the lender. While these factors are not impossible to overcome, they may require an owner builder to shop around to find the best lender possible. Below, we have listed a few of the steps that need to be taken in order to obtain this type of loan.



  • Business Plan: Building a home, by nature, is a complex task. There are a multitude of things that go into building a home and a lender will want assurance that the owner builder knows what they are doing. In order to be considered for a loan of this type, an individual needs to had a full business plan prepared which gives a projected timeline for construction, any delays that may occur, and any and all costs that are associated with the construction. Other things to include in a business plan are building permits, material costs, and any labor fees that could be associated with the project.
  • Loan Qualification: Like any loan qualification process, a lender will look into the financial background of a potential loan holder. This is done in order to make sure that they will be properly reimbursed once it is time for the loan to be repaid. Lenders will typically review an owner builder’s income, credit score, debt-to-income ratio, and cash reserves to determine if they qualify for a loan. Additionally, lenders will almost always want a down payment valued at at least 30 percent of the total loan amount. Finally, as we have mentioned before, most lenders will require that someone with a certification in construction be involved in the project before they sign off on the loan.



Once you have gone through these steps, you will need to gather the people who will be performing work on the project. This includes all subcontractors, independent workers, and any other people who will lay hands on construction materials. It is important that an owner builder properly vets these workers to ensure that they are not wasting money from their loan on unqualified people who will not perform as needed.


We hope that this blog series has thoroughly covered owner builder loans and that you, as an investor, feel more confident in this particular loan type. If you would like to learn how to become an investor at Owner Builder Loans, LLC, please visit our website today and get in touch with us. We have been providing owner builder loans for decades and we are certain that investors will see a return on their investment in as little as a year. Contact us today and let us show you how much money you could be making!