Everything You Need To Know About Quicken Loans Construction Loans

Construction loans allow buyers to finance the building of a new home or renovations to an existing property. These loans provide the funds needed upfront to pay for land, materials, labor and other costs tied to a construction project.

Quicken Loans offers several types of construction loans for eligible borrowers. These include FHA and USDA construction loans which come with certain benefits like low down payments.

In this comprehensive guide, we’ll explain what you need to know about getting a Quicken Loans construction loan.

What Are The Types Of Quicken Loans Construction Loans?

Quicken Loans offers borrowers several options when it comes to construction lending. This includes:

FHA Construction Loans

FHA construction loans are insured by the Federal Housing Administration (FHA) These government-backed loans come with certain key perks

• Low down payments – Borrowers may qualify for a down payment as low as 3.5% of the purchase price This is lower than what many lenders require for standard construction loans.

• Lower credit score requirements – You can qualify for an FHA construction loan with a credit score as low as 500. Many lenders require higher scores for other construction loans

There are two main types of FHA construction loans offered by Quicken Loans:

• FHA 203(k) loans – These allow you to finance renovations to an existing property.

• FHA construction-to-permanent loans – These let you finance the building of a new home on vacant land.

USDA Construction Loans

USDA construction loans are backed by the U.S. Department of Agriculture (USDA). The main benefits of these loans include:

• No down payment – USDA construction loans require zero down payment. This makes it easier for buyers without much in savings to qualify.

• One loan/one closing – You only need to take out and close on one USDA construction loan. It starts as a construction loan and later converts to a permanent mortgage once building completes.

To qualify for a USDA construction loan, you must build in an area the USDA designates as “rural”.

VA Construction Loans

Quicken Loans offers VA construction loans which are guaranteed by the U.S. Department of Veterans Affairs. The main perks of VA construction loans are:

• No down payment – Like USDA loans, VA construction loans require no down payment.

• Lenient credit requirements – VA loans allow borrowers to qualify even with poor credit.

The catch is that only military members, veterans and surviving spouses can apply for VA construction loans.

Conventional Construction Loans

In addition to government-backed construction loans, Quicken Loans offers conventional construction loans.

While these loans don’t come with the same lenient requirements, they also don’t have restrictions on property location or borrower eligibility like FHA, VA and USDA loans.

What Are The Steps To Getting A Quicken Loans Construction Loan?

If you want to move forward with getting a Quicken Loans construction loan, you’ll need to complete a few key steps:

1. Check Your Eligibility

Your first step is to verify you meet the eligibility requirements for the specific construction loan you want.

For FHA loans, you’ll need a minimum credit score of 500 and a debt-to-income ratio below 50%. USDA construction loans require you to build in a rural area. VA loans are limited to veterans and military spouses.

If you don’t meet the requirements for a government-backed loan, a conventional construction loan may be your best bet.

2. Find A Lender

You can’t go directly to Quicken Loans for a construction loan. Instead, you’ll need to work with a Quicken Loans-approved lender in your area that offers construction lending.

You can search for lenders in your area using Quicken Loans’ online tool. Make sure to ask potential lenders if they offer the specific type of construction loan you need.

3. Choose A Contractor

For FHA and USDA construction loans, your contractor must be approved by the government agencies insuring those loans.

Your lender can guide you on finding an approved contractor in your area. Make sure to get multiple bids and check references before choosing.

4. Submit Required Documents

When applying for a Quicken Loans construction loan, your lender will require certain documents to verify your eligibility.

This usually includes bank statements, tax returns, debt information and proof of income. Provide requested documents in a timely manner to keep your application on track.

5. Close On Your Loan

During closing, you’ll sign final loan documents and your lender will disburse the loan. Construction on your project can then begin.

For construction-to-permanent loans, you’ll later have a second closing when the construction loan converts to a permanent mortgage.

What Are The Pros And Cons Of Quicken Loans Construction Loans?

Before applying for a Quicken Loans construction loan, consider both the advantages and potential drawbacks:

Pros

• Low or no down payment options
• Competitive interest rates
• Lenient credit requirements
• One loan from start to finish

Cons

• Restrictions based on location, property type and borrower eligibility
• Require approved contractors on government loans
• Additional fees like upfront mortgage insurance premiums
• Limited lender options compared to standard mortgages

What Are Some Alternatives To Quicken Loans Construction Loans?

If a Quicken Loans construction loan doesn’t work for you, here are a few other options to consider:

• Local bank or credit union construction loans – Community lenders are worth checking if you want personalized service.

• State and local housing agency loans – Your state may offer special construction loan programs.

• Home equity loans – If you have equity, a home equity loan or line of credit can provide funds for renovations.

• Personal loans – Banks and online lenders offer personal loans that can be used for home improvement projects.

• Credit cards – Putting renovations on a 0% APR credit card lets you pay down the balance over time.

FAQs About Quicken Loans Construction Loans

How much does Quicken Loans lend for construction?

Quicken Loans itself doesn’t set lending limits for construction loans. Approved lenders in the Quicken Loans network establish their own construction lending policies.

Loan amounts can vary drastically based on factors like your income, debts, credit score and the specific loan program.

What credit score is needed for a Quicken Loans construction loan?

The minimum credit score depends on if you get a government-backed or conventional construction loan.

FHA loans require a minimum score of 500. For conventional loans, many lenders want to see scores of at least 620 or 640.

The higher your score, the better your chances of approval and lower interest rate.

Can I get a construction loan for an existing home renovation?

Yes, you can get a construction loan from Quicken Loans for renovations. FHA 203(k) loans allow you to finance repairs to an existing property.

You can also potentially use a home equity loan or line of credit to fund renovations if you have sufficient equity.

How long do I have to build a home with a Quicken Loans construction loan?

Construction lenders typically give 12 months to complete construction from the time the loan closes. Make sure to account for potential delays when estimating your project timeline.

If needed, you may be able to get an extension of 6 months or more to complete construction. Check with your lender on their policies.

The Bottom Line

Through network lenders, Quicken Loans offers a variety of construction loan options to meet different needs. Just make sure to consider eligibility requirements, costs and timelines as you choose the right loan.

Connecting with a Quicken Loans-approved lender is the first step to getting started. They can guide you on the loan options that best match your financial situation and construction plans.