When one is both the owner and the builder of their own home, they will have some difficulty securing a home loan. This is because banks and lenders are wary of these owner builders. The more common practice is that banks and lenders usually lend only to those homes that are built by licensed builders, and not to those who are owners and builders at the same time.

However, this does not mean that getting a loan of this type is impossible. There are a few lenders who are willing to grant such a loan as long as the loan applicant is capable of providing a guarantor for in order to further ensure that the loan will be paid. Such a loan is also possible if there is a large amount of equity that can be provided, hence less risk is involved.

Despite the presence of these lenders, there are still some restrictions on the amount that one can borrow, or if borrowing is allowed at all. For first time home buyers the regular rate allowed to be borrowed is 80% of the property value. On the other hand an investor make likewise loan 80% of the property value. With the help of guarantors even in these owner builder construction loans there is the possibility of getting a 100% loan. For low doc loans an owner builder loan cannot be granted at all unless special arrangements are entered into which can be very costly.

Would be borrowers should also note that with regards to the value of the property they often will look at the plans and cost of construction. In most cases they will value the construction project at the value of the land and what any construction will cost.

However, lenders are usually conservative in any assessment of property and as much as possible will usually try to value any property and construction cost as low as can be allowed. This means that any owner builder should have sufficient equity interest in the land in question.

It should also be noted that unlike your regular home loans where funds are immediately release. In owner builder construction loans funds are slowly released as the construction progresses. Each step of construction usually means a new release of funds. Thus the lender usually monitors the progress of the property being built