Timber Framed House Mortgages

Hamill Creek   |   Jan 26, 2023

There is no denying that timber frame houses are unique. Whether you’re interested in purchasing a home or building a timber frame house, you should know all your financing options when investing in real estate.

While it was once difficult to get a traditional mortgage for a timber frame house, it is not as much of an issue today. From conventional mortgages to FHA loans, you have many options for financing a timber frame house. In the event you would like to build, you can also look into construction mortgages.

If you follow the right steps with purchasing or building a timber frame home, it can be an extremely lucrative real estate investment. First, let’s look a little bit closer at your options for financing a timber frame house.

Investing in a Timber Frame Home

With so many people interested in moving to rural and mountainous regions, timber frame houses are some of the fastest-selling homes on the market today – especially when the place is built with craftsmanship at the level of Hamill Creek.

In today’s real estate market, people are attracted to timber frame homes because they are eco-friendly and aesthetically pleasing. With their natural, rugged look, timber frame structures represent the pioneering spirit on which North America was founded.

If you take good care of your timber frame home, these structures can last well over 100 years.

Can You Get a Mortgage for a Timber Framed House?

Since the post and beam construction technique of timber frame structures is so unique, people often wonder whether they can get a traditional mortgage for these properties. As long as you purchase a timber frame house that is already built, the mortgage loan process is the same as when financing a normal home.

Popular mortgage options for timber frame homes include:

  • Fixed-rate/conventional
  • FHA (Federal Housing Administration)
  • VA (US Department of Veteran Affairs)
  • USDA (US Department of Agriculture)

Different mortgage options are available for people from unique backgrounds and financial means. No matter what mortgage you qualify for, expect a down payment of anywhere from 3.5-20% to purchase a timber frame home.

What are Construction Mortgages?  

If you are interested in financing timber frame home construction with a company like Hamill Creek, then you should look into a construction mortgage. According to Investopedia, “a construction mortgage is a type of loan that finances the building of a home specifically. The money loaned is often advanced incrementally during the building phase as the work progresses.”

There are two common types of construction mortgages used today:

  • Stand-alone Construction Mortgages: are used to cover the cost of building a new home. Generally speaking, stand-alone construction mortgages are in single year terms.
  • Construction-to-Permanent Mortgages: cover the cost of construction, then convert to a more traditional mortgage after the home is finished being built.

With stand-alone mortgages, borrowers are generally required to pay back the funds borrowed during construction – or secure a new mortgage after the fact to cover construction expenses. Construction-to-permanent mortgages allow you to skip a step by securing all your financing with single application.

Construction Mortgage Eligibility Requirements

Whether you are building a brick and mortar or timber frame house, construction mortgage loans are always considered high-risk. As such, not only are construction mortgages harder to obtain, but they generally come with higher interest rates as well.

Importantly, lenders who offer construction mortgages will vet builders to ensure that the project will be finished in a timely and professional manner. Moreover, you must provide the lender a signed construction contract including all the details of the project.

Are Timber Frame Homes More Expensive to Insure?

Even though timber frame houses are just as strong as brick and mortar homes, they are still considered “nonstandard” among home insurance providers.

According to the Prime Insurance Company website, “nonstandard property coverage is property coverage for homes/condos/HOAs/mobile homes/commercial buildings not traditionally covered by standard policies.” While nonstandard property insurance is a bit more complicated to acquire than regular home insurance, monthly costs should be pretty similar after everything is said and done.

With decades of experience in building timber frame homes, Hamill Creek can advise you on the best avenues for insuring your new timber frame property.

Contact Hamill Creek

At Hamill Creek, we take great pride in providing sustainable, custom-built timber frame homes. We can also help advise you on how to get a mortgage for a timber frame house.

Contact Us to learn more about our home kits, floor plans, and custom designs!

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