Financing
Financing a new build: loans explained in plain language
FHA, VA, USDA, and conventional loans all work on new construction, and the differences matter more than most buyers expect. This guide explains each program in plain language, walks the practical financing steps for a CBH-style purchase, and points you to the mortgage partner the team recommends. Program details and eligibility always change, so treat this as the map, not the final answer.
What loan types can you use on a new construction home?
Four loan families cover most new-construction purchases: conventional loans sold to Fannie Mae or Freddie Mac, FHA loans insured by the Federal Housing Administration, VA loans guaranteed by the Department of Veterans Affairs, and USDA loans guaranteed by the U.S. Department of Agriculture for eligible rural areas. The Consumer Financial Protection Bureau has an official overview of the different kinds of home loans , and it is worth reading before you talk to any lender.
Each program sets its own down payment, credit, mortgage insurance, and property rules, and each handles new construction slightly differently. The right choice depends on your income, credit, savings, military service, and where the home sits, not on which program a lender prefers to sell.
How is an FHA loan different on a new build?
FHA loans are insured by the Federal Housing Administration, part of HUD, and are built for buyers with smaller down payments and more flexible credit. HUD explains that FHA insures the loan so lenders can offer terms like a down payment as low as 3.5 percent and easier credit qualifying on its official FHA loans page . FHA buyers pay an upfront mortgage insurance premium plus an annual premium for the life of the loan in most cases, which lenders can explain in exact dollar terms.
On new construction, FHA offers a one-time close option that finances the land and the build in a single closing, and FHA requires the home to meet its appraisal and construction standards. For a to-contract purchase from a production builder, a standard FHA purchase loan on the completed home is common. Confirm the exact requirements with a participating lender, because FHA rules apply to the builder and the property, not just to you.
What should veterans know about VA loans on new construction?
The VA home loan program, for eligible veterans, service members, and some surviving spouses, offers up to 100 percent financing with no down payment in many cases, no monthly mortgage insurance, and competitive rates. The official program page at va.gov is the authoritative source, and it explains the Certificate of Eligibility, the funding fee (which can be financed and is waived for some disabled veterans), and closing costs.
For new construction, VA offers a one-time close construction-to-permanent loan, so a veteran can lock one rate and close once for the build and the permanent mortgage. The builder must be licensed and insured, a VA appraisal is required, and lenders set their own overlay credit requirements even though VA itself does not set a minimum credit score. Because the funding fee and terms change, confirm the current numbers with your lender and check the VA funding fee page before you commit.
When does a USDA loan make sense for new construction?
USDA guaranteed loans help low- and moderate-income buyers purchase a primary residence in eligible rural areas, with up to 100 percent financing and no down payment in many cases. The program is described on the official USDA Rural Development page for the Single Family Housing Guaranteed Loan Program . The home must be in a USDA-eligible area and be your primary residence, and household income must stay within the program's limits.
USDA handles new construction through an approved lender with a single-close construction-to-permanent loan, and the builder must be approved with relevant experience. Many Treasure Valley and Magic Valley addresses qualify for USDA eligibility even when they feel suburban, and some do not, so the address decides, not the vibe. Your lender can check eligibility for the exact lot.
How do conventional loans compare for new builds?
Conventional loans are the standard mortgage most buyers picture: a fixed or adjustable rate loan that conforms to Fannie Mae or Freddie Mac limits, requiring a down payment that can range from as little as 3 percent to 20 percent or more. Conventional loans with less than 20 percent down carry private mortgage insurance (PMI), which drops off once you build equity, unlike FHA's mortgage insurance. Strong credit and a bigger down payment typically get the best conventional pricing.
On new construction, conventional financing is the most common route for production builder purchases because the completed home finances like any resale. Conventional also offers one-time close construction loans through many lenders. The trade-offs are the ones you expect: conventional underwriting is stricter on credit and debt, and the down payment floor is higher than FHA's unless you use a low-down-payment conventional program.
What does "one-time close" mean, and why does it matter?
A one-time close construction-to-permanent loan finances the land (when you own it), the construction, and the permanent mortgage in a single closing with a single rate lock. You sign once, you get one set of closing costs, and your rate is protected for the length of the build. The alternative is a two-time close, a construction loan that converts to a permanent mortgage at a second closing, which means two sets of costs and a rate that can move between the two.
For a CBH-style purchase where the builder owns the land and builds on a schedule, you may not need a construction loan at all: many buyers buy the completed home with a standard mortgage. But when you do build on your own ground, or when the builder's timeline and payment schedule require construction financing, the one-time close structure is usually the cleaner, cheaper path. Your lender and the builder's sales team should explain exactly how your lot and plan will be financed before you sign anything.
What's the practical financing timeline for a CBH-style purchase?
Step one is pre-approval, and it comes first, before you tour models or fall for a floor plan. A pre-approval letter from a lender tells you the price range you can act on and shows the builder you are a serious, qualified buyer. The team's recommended mortgage partner, Travis Olson at Eureka Mortgage Planning, is introduced on the get approved page , and he can run the numbers for your situation.
Get pre-approved
A lender reviews income, credit, and debts and issues a pre-approval letter. This sets your budget, your rate-lock starting point, and your negotiating position.
Choose the community, lot, and plan
With a budget in hand, compare CBH communities and floor plans against your commute, schools, and timeline, and pick the lot. See the first-time buyer guide for the full walkthrough.
Understand the deposit and the contract
Builders typically collect earnest money with the contract, credited toward closing. Your agent reads every page and flags how the deposit is held and refunded. See the how it works guide for the contract step.
Lock your rate at the right moment
A rate lock holds an interest rate for a set period, usually covering the build timeline or the close date. Locking too early can cost a fee; locking too late risks a rate increase. Your lender advises on timing as part of your loan file.
Close on the completed home
After inspections and the builder walkthrough clear the punch list, you close, your loan funds, and the keys are yours. Closing costs include lender fees, title, escrow, and prepaids, itemized on your closing disclosure.
What are mortgage rates right now?
Rates move weekly, so no number printed here is your rate. For context as of this page's update on October 31, 2026, the average 30-year fixed mortgage in the U.S. ranged from about 7.24 percent to 7.40 percent across the October readings of the Freddie Mac Primary Mortgage Market Survey, the widely cited weekly benchmark published by Freddie Mac and tracked by the St. Louis Fed as MORTGAGE30US . Your actual rate depends on your credit score, down payment, loan program, lock period, and the lender's pricing on the day you lock.
The honest bottom line: shop the loan the way you would shop the house. Compare at least a couple of lenders, ask for the same terms in writing from each, and run the monthly numbers through the site's mortgage calculator . Program details, income limits, and eligibility change, so confirm everything with your lender before you choose, and read the Idaho first-time buyer programs guide if you may qualify for down payment assistance.
Financing first
Meet the mortgage partner the team recommends
Travis Olson brings decades of lending experience to pre-approval, rate locks, and new construction financing. The team coordinates your loan and your offer together so nothing slips between the mortgage and the contract.