Build Your Own House Using an Owner Builder Construction Home

Build Your Own House Using an Owner Builder Construction Home

Owner builder construction loans are loans for people who want to build their own houses. By acting as an owner-builder, you can save a lot of money compared to hiring a General Contractor.

As an owner builder you will do all the work that a General Contractor would. From arranging plumbing and electricity to seeking building approvals, this may work out to be cheaper option.

However, institutional lenders see owner builder constructions as high financial risks. Traditional lenders fear that owner builder construction projects can take longer to complete and believe that construction work and the oversight of construction work should only be done by professionals.

As such, most institution lenders will not loan to people who want to build their own homes and have little or no experience of construction. Generally they will insist you do one of the following:

        Use a General Contractor.

        Use an on site project manager.

        Use a construction management company.

However, if you are determined to build your own house, you can look for finance via an owner builder construction loan.


Owner Builder Construction Loan Lenders

If you want to take on the ultimate DIY challenge and build your how house, there are lenders who can provide owner builder construction loans. Often privately funded, these lenders can do things banks cannot. For example, owner builder construction lenders do not require you to hire contractors. Most institutional lenders require you to pay for materials up front, and then seek reimbursement. If you don't have the money in the first place, this can be hard. With owner builder construction loans, the loan will pay for the work as it is done.

Often the providers of owner builder construction loans will provide additional services on top of financing, such as project management advice, recommended subcontractor addresses, material sources, and information on the standard rates of various materials.

What Are The Benefits Of Owner Builder Construction Loans?

If you are interested in an owner builder construction loan, the first thing to consider is that the interest rate on a loan of this type will be slightly higher than a traditional loan.

Using an owner builder construction loan means building valuable equity.  General Contractor's can charge up to 20% of a property's value as their fee.  If you act as an owner-builder, you turn that 20% into instant equity. You must consider if the higher financial costs are worth these savings and remember that this equity is not free-you will have to work for it.

Building your own house using an owner builder construction loan will allow you to make savings on contractor fees but will still cost you time and effort. If you would like to earn equity, have control and build a house in just the way you would like, the owner builder construction loan route may be for you.

If you would find out more about how to finance building your own home, here is a great resource for information about homes loans and lending.