Construction loan programs 1, 2 and 3 require a fixed price contract with the builder, and a cost breakdown to match. The concept of fixed price seems self-explanatory. Any builder profit is built into the bottom line. A “cost plus contract” involves the builder saying essentially, I will build the house for whatever the subs end up charging plus my fee. In this case the builder specifies their fee, and provides a cost breakdown derived from an estimate of what the subs would charge. Construction loan program # 4 allows a cost plus contract but requires a 10% hard cost contingency in that case. A builder is still required. You cannot act as your own general contractor unless you are a general contractor, and it is clear you’re building your own house, not a spec house. If you are a GC, you must make your living from job income (not capital gains or another job), and you must have your own company. If all of these criteria are met, you can act as your own general contractor.
