Feel like an expert at what it’s like to get a mortgage? We’re here to tell you that financing a custom home in South Carolina is going to be completely different..

Do you have blueprints ready to go? Maybe you have a set of floor plans that are almost perfect, but you’re looking to make a few alterations. Wherever you are in the process of planning to build a custom home, one of the first things you’ll need to have lined up is how you’ll finance the project.

What Are Some Options for Financing a Custom Home?

Traditional: Construction-to-Permanent Loans

One of the most traditional and common custom home financing options is called a “construction-to-permanent loan”. Essentially, this allows you to fund the construction of your home with a loan that converts to a permanent, traditional mortgage after the construction of the home is completely finished.

You’re not required to purchase a lot separately, or fund construction through a personal loan, or anything like that. The construction-to-permanent loan covers every aspect of building, then easily converts to a traditionally-designed mortgage once construction is complete.

If you are building a custom home to act as your primary residence (or even a vacation home), you don’t already have land purchased and need to bundle the lot into your mortgage, or you want to prepay without dealing with any penalties, a construction-to-permanent loan is likely your best bet.

Eligibility requirements are roughly the same as for a regular mortgage, except that they also build in the following:

• The home must be a single-unit, single-family detached home.
• You must intend to utilize the home as your primary or secondary residence. Vacation homes would be fine, but a rental house would not be eligible.
• Your builder must be a licensed contractor in the state you build.

Construction-to-permanent loans aren’t your only options for custom home financing, however. There are a few other options on the table, depending on your needs.

Lot Loans: When You Found the Perfect Spot, But You’re Not Ready to Build

A “lot loan” is a particular type of loan designed to allow you to purchase a residentially-zoned lot for future construction, even if you’re not ready to build.

Many custom home buyers choose this option if they have a particular plot of land they’ve had their eye on and want to ensure it won’t be purchased out from under them. With Greenville’s current spike in land values (caused by so many great people moving to our wonderful hometown area!), if you see land you love? It might be worth signing up for a lot loan in order to make sure you get it before it’s already gone.

There is one more custom home financing option to consider, for those ready to build a custom home that haven’t yet sold their current residence: a bridge loan.

Bridge Loans Close the Sell-to-Build Gap

For many of us, we begin dreaming of a custom home while still paying the mortgage on our current residence. If a homeowner has their floor plan, piece of land, maybe even carpet and hardwood flooring picked out, but they’re just not ready to sell their house immediately, a bridge loan can help… you guessed it, bridge the gap.

A bridge loan is a short-term loan taken out against your current property, in order to finance the purchase of new property.

You may also see it referred to as “gap financing”, or a swing loan. It usually lasts for about six months and can be extended for up to a year. Generally, if your current housing market is stagnant or slow, a bridge loan is a potential option you might choose. In Greenville’s current seller’s market, we think you won’t have any trouble selling your home at all!

Looking to Build a Custom Home in Simpsonville, South Carolina?

At Five Star Construction, we have three decades of experience in a family-owned, local company. We know Upstate South Carolina because we were born and raised here, and it’s our goal to ensure that your custom home creates for you the perfect piece of South Carolina living. Get started building your custom home in South Carolina today by calling us at (864) 303-9143 or contacting us online at any time.