Barden Building Products Blog Archive

Financing A Custom Home Build (+ Free Guide)

Posted by Jamie Kline on Nov 11, 2021 4:07:00 PM

We’ve worked with many customers to design and build their dream home -- one that meets all their needs while staying within budget.

But in our countless discussions with future homeowners, the most common question we get is: “This sounds great, but how do I pay for it?” 

A natural question, indeed. Building a custom home is typically a once-in-a-lifetime experience. Financing the construction is the other half of making it a reality.

The quick answer to that question: A new home construction loan.

Financing A Custom-Built Home: A Two-Part Process

If you’re like the majority of Americans, you probably don’t have a bank account with a six- or seven-figure balance. And it certainly doesn’t replenish itself. 

In other words, you’re probably not going to be your own financier when it’s time to fund the actual construction of your next home. 

New home construction loans are a great way to help pay for your custom home and get work started.

Most lending institutions offer financing options for home construction, though the terms and details may vary. For the most part, construction loans cover the basics of building your home, covering the start-up capital needed to get things moving through what eventually becomes a long-term loan, such as a mortgage

In general, new construction home financing is done in two parts, with the latter contingent on the former:

  1. Construction loan
  2. Traditional mortgage

1. Construction Loan

Typically a short-term loan and with a higher interest rate, construction loans pay exclusively for building a home.  They cover all construction-related project expenses, from putting in the foundation to installing the roof trusses. Construction loans do finance other costs of a custom home project, such as purchasing a lot or landscaping. 

Funds are released in installments, called draws, upon completing construction milestones. 

There can be anywhere from two to 10 draws allotted in a construction loan. You accrue interest on the funds that are disbursed and are responsible for making interest-only payments to your lender while your home is completed.

A loan structured with fewer draws may leave you responsible to pay contractors upfront until the required milestone is met to release the next draw. Working with the right lender and understanding your options is key!

Construction loans are issued with a time limit, usually around 6 months, to complete the project. Just like selecting a lender, choosing an experienced builder or general contractor is necessary to make sure the project is completed on time. 

Compared to other methods, such as stick building or modular construction, Barden’s panelized home construction makes for a more efficient and faster build. Most of the “heavy lifting” is done in our factory where the panels and trusses are made as your site is prepared. Building with panels can shave weeks off your project. 

Further reading: Take a behind-the-scenes look at how we manufacture panels in our factory. 

Like any major project, there are variables that impact construction time, such as weather conditions and contractor availability in your area. Remember, the less time spent building your home is less time the construction loan has to accrue interest.

What Does the Barden Custom Home Building Process Look Like? 

Our Custom Home Building Checklist has the answers! Download your copy right now: 

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2. Traditional Mortgage

Upon completion of construction, the construction loan is converted to a typical amortized mortgage that you pay principal and interest on. 


Where Can I Get a Construction Loan?

Not all major banks offer construction loans. Many of our customers who have secured a construction loan through a bank are using local or regional institutions. 

Banks that do offer construction loans usually only include up to four draws into their packages, putting a financial strain on the customer. 

Outside of the banking system, another place to turn for a construction loan is a third-party lender. 

Finding a third-party lender can be tricky as there are many out there for almost every purpose. However, there are plenty of reputable and established third-party lenders that focus strictly on loans for new custom home construction. 

Just like evaluating a bank’s construction loans, it’s important to spend time analyzing the terms and conditions of a third-party lender’s loans. Don’t be afraid to ask a lot of questions and request references from your local dealer -- there’s no shame in doing your due diligence to make sure you’re getting a loan you can live with. 


Creating a Custom Home That Meets Your Budget

As a company with decades of experience in the home building business, we love helping future homeowners create their next home. 

There are a lot of variables that determine what the cost to build a custom home ends up as. Working with our team, you’re in the driver’s seat with many of the factors comprising the final price tag. 

Our team of in-house designers and our Barden Independent Dealers are happy to work with you to come up with a home that meets your budgetary considerations.

Funding Your Custom Home Project 

Building a custom home is a significant undertaking. And all of the elements that go into taking it from concept to reality are things you want to get right the first time -- you have to live in your new home, after all. 

Just like working with reputable contractors and dependable suppliers, securing financing that meets your needs is one of the most important parts of the home-building process. 

Download the Financing Guide

Want to learn more about financing a custom home build? Our Custom Home Financing Guide is a great next step. It takes a deeper dive into: 

  • How the new construction loan process works
  • How your home builder/Barden dealer gets paid
  • A construction timeline to walk you through the process
  • And more!

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Topics: Panelized Construction, Budget, Technical Specs, Process, Price


Posted by Jamie Kline on Nov 5, 2021 9:45:00 AM

Dear Future Homeowner,

The first thing on everyone’s mind when thinking about building a new home is obvious: how much will it cost?

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Topics: Panelized Construction, Budget, Technical Specs, Process, About, Price

Custom Home Quotes: 4 Key Elements to Look For

Posted by Jamie Kline on Oct 20, 2020 11:00:00 AM

Wouldn’t it be wonderful if after deciding to build a custom home, you immediately found the perfect contractor?

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Topics: Custom Home, Technical Specs, Process, Home Customization, Construction Timeline

Custom Home Cost: Modular Vs. Stick-Built Prices

Posted by Jamie Kline on Sep 3, 2020 4:10:59 PM

There are plenty of ways to build your dream home. 

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Topics: Financing, Technical Specs, Process

5 Home Foundation Types You Can Choose for Your Barden Home

Posted by Jamie Kline on Aug 25, 2020 8:45:00 AM

One of the most common questions I get from future homeowners is: “Can I have x foundation type for my Barden home?” 

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Topics: Panelized Construction, home foundation, Technical Specs, Site Prep, Home Customization

6 Home Foundation Myths Busted

Posted by Jamie Kline on Jul 24, 2020 9:28:49 AM

The base of any good home is a solid foundation. 

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Topics: Exterior Design, home foundation, Technical Specs, Process, Site Prep, Home Customization

Home Building in WNY: Panelized vs. Modular Timelines

Posted by Jamie Kline on Jul 22, 2020 8:00:00 AM

After my recent conversation with a former WNY modular home builder, I met with two different customers who each had very different circumstances.

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Topics: Panelized Construction, Buffalo Home Building, Technical Specs, Process, Floor Plans, Price, Site Prep, Home Customization

WNY Modular Homes: My Conversation With the Competition

Posted by Jamie Kline on Jul 16, 2020 8:00:00 AM

Barden Building Products is often confused for a modular builder. I’m frequently asked about the differences/advantages of what Barden does vs. other Buffalo modular home companies. (If you don’t know the difference, check out our explanation here.)

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Topics: Panelized Construction, Technical Specs, Process, About, Site Prep, Home Customization, Panelized Vs. Modular Home Building

What Goes into the Price of a Modern Farmhouse?

Posted by Jamie Kline on Jun 23, 2020 9:17:22 AM
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Topics: Budget, modern farmhouse, Technical Specs, Process, About, Price

The Modern Farmhouse: Blending Quality and Timelessness

Posted by Jamie Kline on Jun 17, 2020 1:22:16 PM

As a custom home company, our customers are always in the driver’s seat -- if there’s something they want in their 100% customized home, chances are we can do it. 

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Topics: Panelized Construction, Behind the Scenes, Exterior Design, Interior Design, modern farmhouse, Technical Specs, Floor Plans, Home Customization

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