The current housing market, both in terms of new construction and in terms of home purchases, is experiencing unprecedented and challenging circumstances. When it comes to purchasing a new or existing home, there is a limited amount of inventory available. Construction is booming, and materials are experiencing longer lead times and higher prices as a result of the increased demand. Inventory may not be an issue if you are buying a custom-built home. In contrast, prices, and the impact they have on your loan, can influence what you build and how it is designed.

In planning your budget and financing options for your custom home in 2022, keep the following considerations in mind.

#1 Create A Design That Fits Your Budget.

The importance of making design decisions early enough so that your builder can secure pricing before the market shifts cannot be overstated. The cost of making changes, later on, can be prohibitively expensive. Furthermore, the products that you desire may not be available at the time of your request. During the design phase, make sure to consider all of your options.


Custom Home Builder Innisfil makes it easier to work with a design/build firm. Cedar Hills Contracting Builders keeps you updated every step of your design journey. Every design decision, from square footage to the style of countertops, has an impact on the bottom line. This awareness will allow you to stay in your comfort zone. It also helps you to stay within your loan limit.


#2 Keep An Eye Out For Contingencies

Many lenders require that you include a contingency of 3 percent to 10 percent when calculating your mortgage payment and loan amount in order to protect yourself against the unforeseeable. When calculating your monthly payments for a million-dollar loan, keep in mind that only a portion of the total cost is included in the purchase price of the property.

#3 Understand How Appraisals Are Taken Into Consideration When Approving Loans.

Construction loans are used to finance the construction of custom homes. They differ from traditional new-home loans in several ways. Construction loans are essentially loans that are taken out for the purpose of building something that is not yet finished. Because of this, you will be required to make a larger down payment. Usually, it’s at least 20% of the total cost. You must also take into account the appraisal. It is possible that you will be required to make a smaller down payment if your appraisal is higher than the estimated total project costs. Custom homes are more vulnerable to this because appraisers may not have comparables in the area to use as a basis for comparison. Your appraisal may be lower if your custom home is located on a piece of land that contains older homes that have different building codes and energy requirements than your custom home.

#4 Don’t Forget To Take Into Account What Loans Do Not Provide.

It is the future value of your home that lenders are concerned about. The hidden costs of building a home can significantly increase the amount of money required for a down payment.

The appraisal has no bearing on the final price. For example, locating the house in a difficult area could increase the cost of the property, but this would not be apparent on an appraisal, and thus the loan would not cover the additional cost of the property.

Builders can assist you in navigating the home-building process, both before and after the construction of your new home is complete. We collaborate with buyers in order to gather the information that will be needed by the bank or appraiser. A good builder will also be able to provide insight into how well the homes they have constructed are selling in relation to their purchase price. Inquire as to how much a home is worth in comparison to its purchase price. While some builders claim that a project is less expensive than another, the reality is that the cost of the project will rise as it proceeds through the stages. It is our guarantee that buyers will be able to see the final price before signing the contract.