Construction Loans
Financing Your Home From the Ground Up
Construction loans are designed to finance the building of a new home, major renovation, or custom construction project. Unlike a traditional mortgage, funds are typically released in stages as construction progresses, which makes the loan structure, timeline, and qualification process a little different.
Whether you’re building a primary residence, tackling a major renovation, or exploring a construction-to-permanent loan, the right financing depends on the project, the builder, your budget, and how the loan will convert once construction is complete.
Construction loan programs, draw schedules, down payment requirements, builder approval, and qualification standards vary by lender and project.
How Construction Loans Work
Project & Builder Review
The lender reviews your construction plans, budget, timeline, and builder qualifications before final approval.
Loan Approval & Closing
Once the project and borrower are approved, the construction loan closes and the funds are set aside for the approved build.
Funds Are Released in Draws
Instead of receiving the full loan amount at once, funds are typically released in stages as construction milestones are completed and verified.
Construction Converts to Permanent Financing
With a construction-to-permanent loan, the construction financing converts into a traditional mortgage after the home is completed, subject to the loan terms and final requirements.
Construction Loan Requirements to Expect
Credit & Income Review
Lenders typically review your credit, income, assets, debts, and overall financial profile to determine eligibility.
Builder Approval
Your builder may need to meet the lender’s experience, licensing, insurance, and documentation requirements before construction can begin.
Plans, Budget & Timeline
Detailed construction plans, specifications, contracts, cost breakdowns, and a realistic project timeline are typically required for review.
Appraisal & Project Review
The lender may review the projected completed value of the home and confirm that the project, plans, and budget meet program guidelines.
Planning a Construction Project?
Let’s look at your project, budget, timeline, and financing options so you can understand what may be possible before you break ground.
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