What Is a Self-Build Construction Loan?

Have you ever dreamed of building a custom home that’s tailored exactly to your style and needs? With a self-build construction loan from GMFS Mortgage, you can take charge of the process and bring your vision to life — from the ground up.

Unlike buying a move-in ready home, a self-build construction project puts you in control. But it also comes with extra responsibilities. Here’s what you need to know about how this unique loan works and what’s expected when you choose to act as your own general contractor.

How Does a Self-Build Construction Loan Work?

A self-build construction loan is designed for borrowers who want to manage the construction of their new home themselves, rather than hiring a general contractor to handle the entire project. With this type of loan, you work directly with builders and subcontractors, and take responsibility for coordinating and managing the overall process.

At GMFS Mortgage, our self-build construction loan program:

• Allows up to 90% Loan-to-Value (LTV) — meaning you only need to bring 10% to the table in equity, land value, or cash.
• Requires detailed cost estimates — you’ll need to provide written quotes for each phase of construction. For example, if your foundation is expected to cost $20,000, we’ll need to see a matching $20,000 bid or contract from your contractor.
• Verifies your liquid assets up front — because you’ll be responsible for cash flowing the project, we need to confirm you have sufficient liquid funds to complete the build. This ensures your home can be completed on time and within budget.

Important Responsibilities as a Self-Builder

When you choose a self-build construction loan, you’re essentially acting as your own General Contractor (GC). This means:

• You’re responsible for cash-flowing your project, just as a professional GC would. Often you’ll pay upfront for materials and labor, then be reimbursed once inspections confirm completion.
• You’ll need to open a dedicated checking account at a bank of your choice, solely for managing your construction loan funds.
• You’re responsible for hiring, verifying, and managing your subcontractors. GMFS strongly recommends confirming that any subcontractors you hire are properly licensed and insured to protect your investment.

Important Facts About Your GMFS Construction Loan

• Start & finish deadlines: Construction must begin within 30 days of closing, and all work must be completed within 12 months of closing.
• Scope of work: The build must follow the plans and specifications used to appraise the home.
• Contingency funds: These funds are only released if unforeseen, necessary repairs or deficiencies are discovered during construction.

FAQs: Self-Build Construction Loans with GMFS Mortgage

What is a self-build or owner-builder construction loan?

A self-build (or owner-builder) construction loan allows you to manage the construction of your own home. You serve as the general contractor, hiring and overseeing subcontractors and managing costs, instead of paying a builder to handle the entire process.

How are funds released during the build?

Funds are released in draws, based on work completed. Each draw requires:

• Invoices equaling the draw amount
• An inspection verifying the work is done
  Once approved, GMFS funds the draw by check or wire.

How long does each draw take?

Typically 3–5 business days, depending on how quickly inspections and title checks are completed.

Will I need to pay upfront costs?

Yes. As your own GC, you’ll often pay out of pocket for labor and materials. You’re reimbursed after inspections show work complete.

Do I need a special bank account?

Yes. You must open a dedicated checking account at a bank of your choice solely for managing construction funds.

How long do I have to complete construction?

• Construction must start within 30 days of closing
• All work must be completed within 12 months of closing

Self-Build Construction Loan Checklist

Here’s a quick snapshot to keep handy as you plan your build:

✔ Open a dedicated checking account for your construction loan funds
✔ Hire only licensed & insured subcontractors
✔ Submit draw requests through Built, by email, or by phone
✔ Provide invoices matching your draw request
✔ Ensure work is completed before inspection & funding
✔ Keep timelines in mind: start within 30 days, finish within 12 months
✔ Plan to pay upfront costs and be reimbursed after inspections

Ready to Build Your Dream Home?

A self-build construction loan from GMFS Mortgage can give you the freedom to create the exact home you’ve always wanted. Our experienced team is here to guide you through every step — from initial planning to final draw.