The Down Payment Question

Many of our customers, especially first-time home buyers, have a lot of questions about the best way to finance their land home package, and what is required to get the finance process started. With more than 50 years of experience in land home projects through the use of construction loans, we have the knowledge and experience to help you find the best financing arrangements possible, and we are always happy to do so.

One of the most significant elements in this process is the down payment. Let’s answer some of the questions about this that we hear most often.

1. Will I need a down payment for financing?

Yes, a down payment is required to be pre-approved for a loan if you are applying for FHA or Conventional Construction loans.

2. What amount of down payment is necessary to obtain financing?

The amount of down payment required is determined by the type of loan. Ma Williams works with lenders that offer FHA, VA and Conventional construction loans. The VA construction loan requires no down payment. The FHA construction loan requires a minimum down payment of 3.5% of the total purchase price of the project. The Conventional construction loan requires a minimum 10% down payment.

Example: In Riverside County, the average minimum project costs for land and home projects is approximately $275,000. Based on that number, a down payment of 3.5% for the use of an FHA construction loan equates to approximately $9,625.

Having at least $8,000 to $10,000 saved for a down payment puts you in good position for your purchase.

3. When is the down payment required?

The down payment must be available to you when applying for the loan. If you do not have the full down payment, then most of the down payment should be saved with the remaining down payment needed attainable in a short amount of time. The funds for use will be needed once you are ready to fund the construction loan, which could be within 60 days of your approval, depending on your purchase type and how quickly all costs are ascertained.

4. Are down payment assistance programs available?

There are currently no down payment assistance programs that the lenders we work with offer on construction loans that allow for down payment assistance, so buyers should have their down payment saved when applying for construction loan financing.

5. Are gifted funds for down payment allowed?

Yes! Gifted funds for a down payment from a relative are acceptable by most lenders.

6. Should we secure loan preapproval before visiting Ma Williams?

You do not need to obtain a pre-approval from a lender before visiting Ma Williams. Ma Williams can help you get pre-approved; we work closely with a select group of trusted lenders that are well versed in our process and requirements for manufactured home and land packages. That experience also benefits our customers.

7. What else do I need before beginning the home-buying process?

It helps if buyers provide a completed loan application (which we provide) with completed employment and residence history for at least three years along with income documents, which include pay stubs and W2 forms. For buyers that are self-employed, lenders will require two most recent years of Federal tax returns, inclusive of Schedule C, to determine income. These items are needed to submit to the lender for pre-approval.

Still have questions? We’re here to help. Talk to a Ma Williams representative today