According to the NAHB, a construction-to-permanent loan has several advantages, including offering "buyers some valuable bargaining points for obtaining a lower sales price."
New-home buyers struggling to come up with a sizeable down payment should consider FHA or VA construction loans, says Melman.
Daria Pestone recently took out a construction-to-permanent loan with TD Bank to build a four-bedroom, four-and-a-half bath house in Greenwich, Conn.
Pestone found a builder who offered personalized service and fit within her family's budget. In addition to saving for a down payment, Pestone advises buyers to save for the surprise costs they're bound to encounter. "Building your own home is an overwhelming process," she says. "I recommend really researching the builder. Make sure to have your financing in check. A lot of surprises can come along."As well, make sure that you've settled on a general contractor or builder before you start looking for a lender, since the lender will be looking for this when they are underwriting the loan, explains Kinane.