Build vs. buy? It’s a dilemma prospective homeowners wrestle with once they’ve gotten used to the idea that the next place they’ll call home is a house (not an apartment or condo).

According to a recent U.S. Census Bureau report, U.S. homebuilders started construction on homes at a seasonally-adjusted annual rate of 1.67 million in December 2020. That’s a 5.8 percent increase from November. Compared with December 2019, housing starts were up 5 percent, while permits were up 17 percent. That’s the highest level housing starts and building permits have reached since 2006.

Translation: Some families are tired of looking for their dream home and are building it instead. They’re done looking at all the wrong houses and discouraged with the low housing inventory.

No doubt, you’ve encountered clients like this in the past (or especially, more recently) who feel like house hunting is exhausting. Sure, the prospect of finding that perfect home that fits their personality and style, family needs, location requirements, in the right school district and close (enough) to family and shopping can be exciting and enjoyable. But the longer it takes to find the right house, the less fun it becomes.

According to, the average home buyer looks at 10 houses (in a 10-week time span) before finding one they are willing to make an offer on. That’s at least 10 open houses or showings, taking up 10 evenings or part of 10 weekends when they could have been doing something else with their hard-earned free time. And 10 houses is the average, meaning it takes some families even longer to find their new home.

And, as you know, once they’ve found their dream house, made an offer and gotten their hopes up, that doesn’t guarantee that the game is over. The sellers could decline the offer. Financing may fall through. The home inspector might make a deal-breaking discovery. If so, your client will have to start all over.

The next time you start sensing a client’s frustration during their journey, suggest that they start thinking about building their dream house instead of looking for it. It can be a great deal for both you and your client. Here’s how.

Help them build (not buy) their dream house

This construction loan allows your client to build their dream home and purchase the land, all with just one loan process. It is a 30-year, fixed-rate, USDA Rural Development construction to a permanent mortgage. And it could require as little as no down payment.

Building a new home without forking out money for a down payment opens up a significant new pool of interested buyers. Like, people who have always been able to afford the monthly payments in this price range yet did not have the tens of thousands to use as a down payment at closing. This is typically required from most other new construction loans.

This loan first finances the cost of the construction as a short-term interim loan. Once work is complete, it converts to a traditional 30-year, long-term permanent mortgage. Unlike other new home construction lending, this is a one-time close loan. That means buyers don’t have to worry about qualifying for the new home construction loan, then re-qualifying for the traditional mortgage.

Benefits of the loan

What are some other benefits? Here are a few (we think you’ll especially like the first one):

  • The buyer’s agent (that’s you) can receive a commission on the lot AND the total cost of construction
  • Homebuyers can build their dream home
  • Buyers may qualify for as little as no down payment
  • The construction loan is made directly to the buyer
  • The lot can be purchased at closing, or buyers can build on land they already own
  • The loan is fully funded before construction begins
  • Construction can begin as soon as the loan closes
  • This loan eliminates worries of another loan qualification, concerns over a new appraisal, and dual fees associated with the second loan
  • Nine-month construction period starts within 30 days of closing

Several of your clients might come to mind when learning about this option. You know, the ones who seem very picky about the type of house they want. The ones who have been looking for months, or even years, for the right house. Or, maybe it’s the client who has even mentioned that they’d just build a new house if they thought they could afford it.

Putting the new home construction loan option on the table is your chance to possibly save them (and yourself) some time and frustration. Everyone can win.

Once you mention this possibility, they will likely have questions. If they want more details, you should connect them with a lender (like us) who can help.

*Not all borrowers will qualify. Contact us for more information on fees and terms. Not intended as legal, financial, or investment advice. Contact your financial representative for more information.

Passy, J. (2021, January 21). New-Home Construction Activity Soars to Highest Level in Over a Decade, as Builders Rush To Produce Single-Family Homes. Retrieved January 29, 2021, from

Sager, J. (2018, February 13). How Many Homes Will It Take to Find ‘The One’? Retrieved January 29, 2021, from