Steps to make building your dream home a reality.
Your careful planning and preparation and our low mortgage rates can help make building your own home a reality. But first, you’ll want to make sure you’re really ready by following these important steps.
You can also visit LMCU.org/FinancialWellness to learn even more or use our handy calculators to see what it will take to open the door to your new address.
Make sure your finances are in order
Add up your monthly expenses — credit cards, auto loans, student loans, current rent or mortgage — and divide that by your gross monthly income (income before taxes) to determine your debt-to-income (DTI) ratio. This number will help you determine how much home you can afford. The lower your ratio, the better. Ideally, you want your DTI ratio to be 43% or lower.*
Assess your savings
Even buyers with good credit should expect a 5%** down payment (10%** down in Florida), plus an extra 15-25% for finishing costs like landscaping, a mailbox, or fencing. At Lake Michigan Credit Union, we have low down payment options, and our one-time close construction loan will save you money in closing costs.
Determine how much of a monthly payment you can afford
It’s not just your home you’re paying for each month. You’ll also need to pay property taxes, insurance, homeowner’s association fees, city assessments, water, sewer, garbage, utilities, and repairs. All of these expenses should be taken into consideration when planning your monthly budget.
Balance the gotta-haves with the nice-to-haves
To make sure you get everything you need AND want, make a list of both. In the “needs” category, list the features your home must have, like air conditioning and four bedrooms. In the “wants” category, list luxuries like a fireplace in the bedroom and an in-ground pool. When you’re all done with the needs, make sure you have enough left over for the wants.
Consider both buying new and building new
Most builders have homes that are already built and move-in ready. If timing is important, there are great financing options with down payments as low as 3%*** that can get you into that newly built home that checks most of your boxes fast.
Know the neighborhood
If you’re already looking at homes in a specific area, consider what the traffic is like (and not just at 8 a.m. on a Sunday morning). How are the schools? Any railroad tracks or airports nearby that could be a nuisance? Remember, you’re not just purchasing the house, you’re buying into the neighborhood.
If you’re still ready to build, do your homework before picking a lender. Not all financial institutions offer the same loans or charge the same fees. LMCU is Michigan’s number one construction lender**** and we’ve helped thousands of homeowners.
*Credit Karma, 2020.**For well qualified borrowers.***For well qualified borrowers. ****Marketrac, February 2021.