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Construction Loans Compared Type of loanBest forConstruction-to-permanent loanHomeowners who want to save on closing costs and lock in mortgage financingConstruction-only loanThose who have a large amount of cash on hand or who intend to pay off the construction loan with the sale of their previous home2 more rows Jun 14, 2023
To qualify for a construction loan, youll need to meet certain requirements: Youll need to have a good credit score, typically around 680 or higher. Youll need to have a down payment of at least 20%, although some lenders may require more. Youll need to provide detailed plans and specifications for the project.
In general, it is harder to qualify for a construction loan than for a traditional mortgage. Most lenders require a credit score of at least 680 which is higher than what youd need for most conventional, VA, and FHA loans.
But your lenders FICO score requirements may be higher depending on the lender, and other factors. For FHA One-Time Close construction loans, you may find lenders requiring FICO scores in the mid 600s as a condition of loan approval.
Credit Score and Income Minimums Additionally, dont make any large purchases in the months before youre going to apply for a construction loan. Most lenders typically want a minimal credit score of 680 for the loan to be considered, some want the score to be 720 or better.
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