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Construction Loans in Auburn
Auburn buyers sitting on buildable land have options most cities don't. Placer County permits move faster than metro areas, and lots in neighborhoods like Rock Creek and above Foresthill Road are prime for custom builds.
Construction financing here splits into two camps: one-time close loans that convert to permanent mortgages, and two-close deals requiring separate construction and takeout loans. One-time close costs more upfront but saves on duplicate appraisals and closing fees.
Lenders want 20% down minimum for construction loans. Most require 680+ credit and detailed build plans with contractor bids before they'll issue a letter. You're not getting approved on a napkin sketch.
Expect reserve requirements of 6-12 months beyond your down payment. Lenders hold funds in escrow and release them in draws as construction hits milestones. Your builder needs to be licensed and sometimes preapproved by the lender.
Big banks hate construction loans because they're labor-intensive and risky. Regional lenders and credit unions dominate this space in Placer County. Rate spreads between lenders can hit 2% on the same borrower profile.
Shopping construction loans means comparing draw schedules, not just rates. Some lenders do four draws, others do six. More draws mean tighter project oversight but slower access to your funds when contractors finish phases.
Half my Auburn construction clients underestimate timeline risk. A six-month build becomes nine months, and your rate lock expires. We structure deals assuming 20% timeline overage because permits, inspections, and weather delays are real.
The smart play is locking a one-time close with a long rate lock—120 days minimum. If you're doing a spec build to sell, hard money might pencil better despite higher rates because you can close in two weeks and start pouring foundation.
Bridge loans cover land purchase while you line up construction financing. Hard money gets you started fast but costs 9-12% rates. Conventional and jumbo loans only work after the house is built and has a certificate of occupancy.
If you're renovating instead of building from dirt, a construction-to-perm loan still works but so does a cash-out refi if you own the property free and clear. Renovation costs under $75K might fit on a HELOC at better rates.
Auburn's split between city limits and county jurisdiction matters. County parcels often allow larger builds with fewer restrictions, but water and sewer hookups can add $30K-$50K to your budget. Lenders want those costs in your initial loan amount.
Fire zone designations affect both insurance requirements and construction materials. Some lenders won't touch properties in high fire severity zones without proof of defensible space and specific roofing materials locked into plans before approval.
Plan for 45-60 days from application to clear-to-close. Lenders need plan reviews, contractor vetting, and appraisals on theoretical value.
Some lenders allow owner-builders with construction experience and proper licenses. Most require a licensed GC with liability insurance and track record.
You pay overages out of pocket before the lender releases final draws. Budget 10-15% contingency into your initial loan request.
Most construction loans charge interest-only on drawn funds during the build phase. Full principal and interest starts when you convert to permanent financing.
One-time close loans lock your permanent rate upfront. Two-close construction loans require refinancing at whatever rates exist when construction finishes.
Mortgage financing for independent contractors and freelancers who earn 1099 income instead of traditional W-2 wages.
Mortgage programs that allow borrowers to qualify based on liquid assets rather than traditional employment income.
Non-QM loans that use 12 to 24 months of bank statements to verify income for self-employed borrowers.
Short-term financing that bridges the gap between buying a new property and selling an existing one.
Debt Service Coverage Ratio loans that qualify investors based on a rental property's income rather than personal income.
Mortgage programs designed for non-US citizens and non-permanent residents who want to purchase property in the United States.
Asset-based short-term loans primarily used by real estate investors for property acquisition and renovation projects.
Mortgages that allow borrowers to pay only the interest for an initial period, resulting in lower monthly payments upfront.
Financing solutions tailored for real estate investors purchasing rental properties, fix-and-flip projects, or investment portfolios.
Home loans for borrowers who have an Individual Taxpayer Identification Number instead of a Social Security number.
Adjustable rate mortgages held in a lender's portfolio rather than sold on the secondary market, offering more flexible terms.
Non-QM mortgages that use a CPA-prepared profit and loss statement to verify income for self-employed borrowers.
Home loans with interest rates that adjust periodically based on market conditions after an initial fixed-rate period.
Specialized mortgage programs designed to support homeownership in underserved communities with flexible qualification criteria.
Mortgages that meet the guidelines and loan limits set by Fannie Mae and Freddie Mac for secondary market purchase.
Traditional mortgage financing not backed by a government agency, offering flexible terms and competitive rates for qualified borrowers.
Innovative loan products that leverage projected home equity growth to provide favorable financing terms.
Government-insured mortgages from the Federal Housing Administration with low down payments and flexible credit requirements.
A revolving line of credit secured by your home equity that allows you to borrow funds as needed during a draw period.
A fixed-rate second mortgage that provides a lump sum of cash by borrowing against the equity built in your home.
Mortgages that exceed the conforming loan limits set by the FHFA, designed for financing high-value luxury properties.
Loans for homeowners aged 62 and older that convert home equity into cash without requiring monthly mortgage payments.
Government-backed zero down payment mortgages for eligible rural and suburban homebuyers who meet income limits.
Government-guaranteed mortgages for eligible veterans, active-duty service members, and surviving spouses with zero down payment.