Homebuyers can put as little as 5 percent down when taking out a new construction loan, with one closing and an optional float-down to secure a lower interest rate, according to United Wholesale Mortgage.

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With sales of new homes expected to be more resilient to a projected 2023 downturn, United Wholesale Mortgage (UWM) has launched a new mortgage product aimed at homebuyers working with builders.

UWM’s “One-Time Close New Construction Loan” lets homebuyers put as little as 5 percent down, and take out a new construction loan with one closing and an optional float-down to secure a lower interest rate if the market changes.

Mat Ishbia

Mat Ishbia

“The streamlined process and certainty One-Time Close New Construction loans offer is unmatched and will set brokers up to be the hero with builders, real estate agents and contractors, and get their borrowers in their dream home,” UWM CEO Mat Ishbia said in a statement.

UWM is making the One-Time Close New Construction Loan available on 15-and 30-year fixed conventional and high balance loans, and 7- and 10-year adjustable-rate mortgages.

As a wholesale lender that works with mortgage brokers, UWM says its new construction loan provides loan officers “with a unique opportunity to generate new business and build referral partnerships with builders and real estate agents.”

The Pontiac, Michigan-based lender is promising to take the lead on communicating with the builder, providing checklists for the project and builder approvals. After a loan closes, UWM says it stays in direct communication with the builder on subsequent draws and inspections to make sure projects stay on track.

UWM rival loanDepot has a number of joint ventures with homebuilders, including NHC Mortgage (with National HomeCorp), LGI Mortgage Solutions (with LGI Homes), Henlopen Mortgage (with Schell Brothers), BRP Mortgage (with Brookfield Residential), MTH Mortgage (Meritage Homes), MSC Mortgage (with Michael Saunders & Company), TRI Pointe Connect (with Tri Pointe Homes) and Day 1 Mortgage (with Century 21 Redwood Realty).

In their latest housing forecast, economists at Fannie Mae said they expect tight supplies of existing homes should help bolster sales of new homes this year.

New home sales seen as resilient

Source: Fannie Mae housing forecast, January 2023

While sales of existing homes are expected to plummet by 22 percent this year, to 3.95 million, new home sales are projected to drop by a more modest 12.7 percent, to 570,000. Next year, Fannie Mae economists see new home sales rebounding by 8 percent, to 615,000, with sales of existing homes projected to grow by 13 percent, to 4.48 million.

“With many existing owners disincentivized to list their homes for sale and move due to ‘lock-in’ effects, by which existing owners have mortgages with rates well below current market rates, as well as overall affordability challenges, first-time buyers have increasingly turned to new homes,” Fannie Mae economists noted.

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