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Construction Lending Center

We’re with you when you’re planning a newly built home.

Make informed decisions with help from Wells Fargo.

If you’re interested in buying a newly built home in a development or building a custom home from the ground up, talk with us to learn more about your construction financing options.

What makes buying a newly built home different from buying an existing home?Show Details

 
  • Options and upgrades. Homes can be customized with options — from floor plans and paint colors to faucets and light fixtures. You might also be able to modify rooms and layouts, include walk-in closets, whirlpool baths, and custom appliances.
  • Potential builder incentives. Some builders try to encourage sales by offering to pay closing costs, points, or by providing special interest rate incentives.
  • A longer wait. Newly built homes typically have lengthier time spans between contract signing and moving day for a variety of reasons.
  • Additional construction documentation. Custom building projects typically require construction project and builder validation, inspection reports prior to payments to the builder, and verifications prior to your final loan preparation.
badgeDetermine the features you want in your new home. Then prioritize what's most important using the house wish checklist.
 

What are the benefits of building a home or buying a newly built home or condominium? Show Details

 
New homes may offer many advantages:
  • More space. Newly built homes are typically larger than existing homes and offer more closet, garage, and storage space. New homes are also thoughtfully laid out with efficient space planning designed for today’s lifestyles.
  • Improved safety. Today's new homes have hard-wired smoke detectors and alarm systems with battery-powered backup.
  • Energy efficiency. Improved heating and cooling systems and better insulation techniques offer efficiencies.
  • Health considerations. New construction materials are free from asbestos, lead, and formaldehyde emissions. New radon control systems are also available.

How can I lock my interest rate range while my new home is under construction?Show Details

 
Our two Builder Best® programs provide rate-lock options that protect against interest rate changes while your home is being built, regardless of market fluctuations.

Builder Best® Classic Program

Features

  • Available on adjustable rate mortgages
  • Lock in interest rates for 90, 120, 150, or 180 days
  • Lock in interest rates for greater than 180 days, up to 12 months (additional fees may apply)

Builder Best® Expanded Options Program

Features

  • Available on government and conventional fixed and adjustable rate mortgages
  • Lock in interest rates for up to 12 months

Benefits

  • Financing for loan amounts up to $2 million
  • Protects against higher interest rates for up to 12 months with our interest rate lock-in option1
  • If interest rates drop, you may seek to exercise a one-time float down option to change to a lower rate2
  • Ability to switch to another eligible product, including fixed-rate and government products2

Benefits

  • Financing for loan amounts up to $2 million
  • Protects against higher interest rates for up to 12 months with our interest rate lock-in option1
  • If interest rates drop, you may seek to exercise a one-time float down option to change to a lower rate2
  • Ability to switch to another eligible product, including fixed-rate and government products2

Considerations

  • Requires a non-refundable Builder Best® participation fee. You will receive a lender credit for an amount equal to the participation fee at the time of loan closing.3
  • Expect to have your loan reviewed again if changes are made (such as changing to a lower interest rate with a float down option)2
  • If your loan closing occurs more than 60 days after re-locking, you will pay additional lock fees2

Considerations

  • Requires a non-refundable extended lock fee3
  • Expect to have your loan reviewed again if changes are made (such as changing to a lower interest rate with a float down option)2
  • If your loan closing occurs more than 60 days after re-locking, you will pay additional lock fees2

How can I finance home construction, including buying a building lot, home plans, and construction?Show Details

 
Custom-Home Construction Financing gives you the convenience of two separate loans: one to finance the construction of your home, and one to act as a permanent loan when the building process is completed.

Features

  • Construction loan financing for up to 12 months with the ability to convert to a permanent loan
  • Available to eligible Wells Fargo customers

Benefits

  • Enjoy the convenience of one application for your construction funds, as well as your permanent mortgage financing
  • Ability to combine with the Builder Best® Program for additional benefits

Considerations

  • Requires an existing Wells Fargo relationship3
  • May not be available in all areas

What should I consider when selecting a builder?Show Details

 
  • Verify licenses. Depending on local guidelines, you may need a licensed contractor for the house to pass required inspections.
  • Check references. Talk to people with homes built by the same builder. If there’s a homeowners association, get minutes from recent meetings to look for complaints about the builder's work. Also contact your local home builders association to see if they’re a member in good standing.
  • Inspect work. Ask to view homes the builder completed and visit a construction site. Make sure the builder is comfortable creating the type of home you like.
  • Consider compatibility. You should feel comfortable asking questions, talking about your ideas, and working closely with your builder.

What are the benefits of condo ownership? Show Details

 
  • Condominiums exist in a variety of styles, locations, and prices.
  • They may provide ownership opportunities for first-time homebuyers.
  • Usually a homeowner association is responsible to maintain the building exterior, grounds, and common areas.
  • Some condos provide convenient vacation getaways; others combine the opportunity for homeownership with the convenience of urban living.

What types of condos does Wells Fargo finance?Show Details

 
  • Established condo projects. Construction is finished and the condo is under the control of a homeowners association.
  • New construction. These condo projects are under the control of the developer because the units are still considered under construction.
  • Conversions. Originally designed for use as something other than a condominium, such as an apartment building or a hotel, these condos are renovated for residential ownership.
  • Resort condos. These communities are located in a vacation destination and primarily used as second homes.

What should I consider when purchasing a condo?Show Details

 
  • Monthly fees. Homeowners association dues provide the funds to insure and maintain the common elements.
  • Insurance coverage. A shared insurance policy, known as a master policy, covers the building’s common elements. You may be required to purchase insurance for the interior of your unit to cover the replacement of fixtures.
  • Resale restrictions. Determine any limitations on your ability to sell your unit.
  • Association rules. Set by the homeowners association, these requirements govern what you are allowed to do with the exterior of your condo unit in order to keep up the project’s appearance. For example, the rules may prohibit satellite dishes. The use of common elements may be governed by rules, for example parking spaces may be assigned.
  • Project approval. Even if you’re not applying for government financing, finding out whether a condo is approved by housing agencies such as the FHA and VA can help with resale by ensuring that future buyers can obtain this financing. It also indicates that the community is performing to certain standards set by government housing agencies. Find out about project approval.

What is the process for financing a newly built home?Show Details

 
Generally, there are six steps for financing a new home from a builder or developer.
Initial Stage Now’s the time to discuss your financing. A borrowing estimate gives you a price range before you begin looking at homes.

We offer different ways to estimate your price range:
  • A free mortgage prequalification provides a rough idea of how much you may be able to borrow based on basic financial data you provide.5
  • A preapproval letter tells the builder you’re preapproved for a specific loan amount based on a preliminary credit review.6


Contact us for information and take the first steps toward your new home.
Application When you're ready to sign a purchase contract, we'll help you complete your mortgage application and provide options to protect your loan from interest rates changes during construction.

Consult our application checklist for items you may need when applying.
Approvals We'll work with you during the loan approval process so you can enjoy seeing your home being built.
Exercise Rate-Drop Options During construction, extended lock programs may help protect against interest-rate fluctuations. If interest rates decline, you can exercise a one-time option to obtain new loan pricing, subject to approval.2

We'll remain in touch to discuss your choices and answer questions.
Completion of Construction In many counties, a final inspection determines that everything is ready so that you or your builder can get a Certificate of Occupancy (or its equivalent) from your local authorities.
Move In Your construction and financing are now complete. Best wishes on your new home.

What's the process for financing the construction of my home from plans?Show Details

 
There are generally seven steps for financing using Custom-Home Construction Financing.
Initial Stage Even if you don't have much finalized, it’s a good time to arrange financing. An estimate of your borrowing gives you a price range before you begin.

We provide different ways to estimate your price range.

  • A free mortgage prequalification gives you a rough idea of how much you can borrow, based on basic financial data you provide.5
  • A preapproval letter tells the builder that you’re preapproved for a specific amount based on a preliminary credit review.6


Contact us for information and take the first steps toward your new home.
Application Your plans are probably starting to solidify. You may have selected a builder and are ready to apply for a mortgage. See our application checklist for items you'll need when applying.
Approvals We'll work with you to get your permanent loan approved. We'll also get the final plans and specs so we can order an appraisal.

After we have the appraisal and a fully executed purchase contract, we'll submit the entire package for construction loan approval.
Construction Closing Following the necessary approvals, we'll close on the loan that finances your home’s construction.

A settlement agent will give you instructions about the amount you'll need to bring to closing. As soon as you close on the final construction loan, you can begin building.
Draw Process During construction, you and your builder will request payment draws from the construction fund for completed work.
Completed Construction In many counties, a final inspection will determine that your home is finished. Then you'll need a Certificate of Occupancy (or its equivalent) from your local authorities.

We'll begin working with you to transition into your permanent loan product and schedule a modification of the construction loan to the permanent mortgage.
Move In Your construction and financing are complete. Congratulations and best wishes on your new home.
For your mortgage needs:
1-877-937-9357
For your home equity needs:
1-888-667-1772

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Newly Built Home

 
Nearly move-in ready and located in a new development or on a builder’s lot, these homes typically come with limited warranties on the house and appliances.
Newly built homes offer features that are not typically available in existing homes, including:
  • Energy efficiency from improved heating and cooling systems
  • A variety of home styles and floor plans
  • Options for cabinets, appliances, and lighting
 
 
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Partial custom home

 
These homes allow limited changes to floor plans and other features. Partial custom homes enable you to:
  • Tailor your home to your lifestyle and individual taste with cabinet choices, room and tile colors, and finished basement options.
  • Specify limited structural changes by increasing room sizes or overall size of the home.
  • Add options and upgrades to the purchase price, which allows you to build the home you want and limit your out-of-pocket expenses.
 
 
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Custom home

 
Typically built from scratch by collaborating with an architect and a builder, these homes enable you to design a home to your specifications.

While custom homes offer the opportunity to create a home optimized to your lifestyle needs and tastes, these projects can require additional consideration:
  • Depending on your builder or the type of financing you obtain, you may be required to make advance deposits.
  • A builder might require that you purchase the lot and secure your construction financing before any work begins.
 
 
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Modular home

 
Built and inspected in a factory environment, these homes provide a combination of quality, speedy construction, and lower cost.
  • Quality. Designed to meet or exceed local building codes and virtually indistinguishable from traditional homes, they often allow owner customization.
  • Speed. Factory built homes have shorter construction periods than site-built homes. The homes are usually up to 90 percent complete when shipped and typically take builders weeks to assemble.
  • Cost. A modular home can save on costs. Projects are less likely to go over budget and lower costs can make modular homes more competitively priced.
 
 
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Interest-rate range

 
Refers to the range of interest rates available to you on any given day and time. Your interest rate range can either be locked or not locked. The interest rate range on the date and time you lock remains available for a set period of time and is unaffected by financial market fluctuations during this time. If your interest rate range is locked, the interest rate on your application will generally remain the same if there are no subsequent changes to the loan. If there are changes, your final interest rate at closing may be different, but will still fall within your interest rate range, as long as your lock period has not expired and your loan program remains the same.
 
 
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Permanent Financing

 
A permanent, long-term loan used to pay off a short-term construction loan or other form of interim financing.
 
 
 
1 A non-refundable participation fee or an extended lock fee will be required for participation in a Builder Best® Classic or Expanded Options. Both Builder Best® programs are allowed with qualified products with lock features ranging from 3 months to 12 months. Due to daily pricing variations between products, you are encouraged to work with your home mortgage consultant to ensure that pricing available on the Builder Best® lock feature that you choose is the most advantageously priced Builder Best® lock feature for you..
2 Change of loan product or program, change in loan to value ratio, float down or re-lock of rate will require underwriting approval. Changing products is not allowed within 30 days of the original lock. You must qualify for the new product and be within 60 days of loan closing. One-time float down option is available within 60-days of closing to any lender program or re-lock your existing product at the current available price range. Re-lock is not allowed within 30 days of the original lock. If re-lock period exceeds 60 days, applicable extended lock fees will be assessed.
3 If the property appraisal report does not satisfy the Lender's requirements or the Lender denies the application as not creditworthy, the extended lock fee is refundable. In all other events, the extended lock fee is non-refundable. Builder Best® Expanded Options lock fee is based on the lock term and the rate cap add-on selected. The upfront fee collected will be applied towards the extended lock fee on your HUD1 settlement statement at time of closing. The Builder Best® Expanded Options program is allowed with qualified products with lock features ranging from 4 months to 12 months.
4 Typically requires an account with Wells Fargo Bank, N.A. or with Wells Fargo Advisers, LLC. Contact a home mortgage consultant for details.
5 A prequalification lets you estimate how much you may be able to borrow to buy a home, does not require a credit check, and is not a commitment to lend.
6
A PriorityBuyer® preapproval is based on our preliminary review of credit information only and is not a commitment to lend. We will be able to offer a loan commitment upon verification of application information, satisfying all underwriting requirements and conditions, and providing an acceptable property, appraisal, and title report. Preapprovals are subject to change or cancellation if a requested loan no longer meets applicable regulatory requirements. Preapprovals are not available on all products. See a home mortgage consultant for details.
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