Construction Loans - Build Your Dream HomeSingle-Close Construction-to-Permanent Financing
Finance the construction of your custom home with one loan, one closing, and your rate locked in during construction. Build exactly the home you want with streamlined financing.
Why Choose a Construction Loan?
One Closing
Single closing covers both construction and permanent mortgage
Rate Lock
Lock your interest rate during construction phase
Interest Only
Pay only interest during construction period
Custom Build
Design and build your perfect home
How Construction Loans Work
Pre-Approval & Planning
Get pre-approved based on your detailed construction plans, builder contract, and budget. Work with your builder to finalize plans and specifications.
Construction Phase (6-12 Months)
During construction, funds are disbursed in draws based on completed milestones. You pay interest only on the disbursed amount. Construction is inspected at each draw.
Automatic Conversion to Permanent Loan
Once construction is complete and your home passes final inspection, your loan automatically converts to a permanent mortgage. No second closing or additional fees required.
Types of Construction Loans
Single-Close Construction Loan
The most popular option - one application, one closing, one set of fees. Your rate is locked for the entire construction period and permanent mortgage.
- One closing saves time and money
- Rate locked during construction
- Simplified approval process
- Automatic conversion to permanent loan
Two-Time Close Construction Loan
Separate loans for construction and permanent financing. Construction loan converts or refinances into a permanent mortgage after completion.
- Two separate applications and closings
- Opportunity to refinance at better rates
- Higher initial costs (two closings)
- More flexible if plans change
Construction Loan Requirements
- Detailed Building Plans: Complete architectural plans and specifications reviewed by appraiser for feasibility and cost accuracy
- Qualified Builder: Licensed, insured contractor with proven track record. We maintain relationships with reputable builders in the region
- Detailed Budget: Line-item construction budget covering all costs including materials, labor, permits, and contingencies
- Down Payment: Typically 20-25% down payment required for construction loans. Lower down payments available with strong credit
- Credit Score: Minimum 680 credit score typically required. Higher scores qualify for better rates and terms
- Appraisal: Construction appraisal based on completed value of the home using your plans and specifications
- Construction Timeline: Realistic construction schedule, typically 6-12 months. Extensions available if needed
Benefits of Construction-to-Permanent Loans
Streamlined Process
One application, one approval, one closing. Save time and reduce paperwork with a simplified process that covers both construction and permanent financing.
Lower Costs
Pay closing costs only once instead of twice. Save thousands in fees, appraisal costs, and title insurance compared to two-time close loans.
Interest-Only Payments
During construction, pay only interest on funds that have been disbursed. Keep your monthly payments low while your home is being built.
Rate Protection
Lock your interest rate at the start of construction. Protected from rate increases even if construction takes longer than expected.
Build Your Dream Home
Complete control over design, materials, and finishes. Build exactly the home you want rather than compromising on an existing property.
Expert Guidance
Work with experienced construction loan specialists who understand the building process. We coordinate with your builder and ensure smooth progress.
What Can You Build?
Custom Home Construction
Build your dream home from the ground up with your own design, floor plan, and finishes. Perfect for creating a truly personalized living space.
Spec Home Development
Build homes for resale. Experienced builders can finance spec home projects with construction-to-permanent loans.
Knock-Down Rebuild
Purchase a property, demolish the existing structure, and build new. Financing can cover acquisition, demolition, and construction costs.
Builder Development
Professional builders developing multiple lots can use construction loans for residential development projects.
Construction Loan FAQs
How long does construction loan approval take?
With complete documentation (plans, builder contract, budget), approval typically takes 30-45 days. Having all documentation ready upfront speeds up the process significantly.
What if construction costs more than expected?
It's important to include a contingency fund (typically 10-15%) in your budget. If costs exceed the loan amount, you'll need to cover the difference. Accurate budgeting upfront is critical.
Can I act as my own general contractor?
Owner-builder loans are available but have stricter requirements. You'll need to demonstrate construction experience and may face higher down payment requirements and rates.
How are construction draws disbursed?
Funds are released in scheduled draws as construction milestones are completed (foundation, framing, rough-in, etc.). An inspector verifies completion before each draw is released.
What happens if construction takes longer than planned?
Most construction loans allow 12 months for completion. Extensions are typically available if needed. Your rate lock remains in effect, protecting you from rate increases.
Do I need to own the land already?
You can either own the land or include the lot purchase in your construction loan. If you own the land debt-free, your equity can count toward your down payment.
Ready to Build Your Dream Home?
Get pre-approved for a construction loan and start building the custom home you've always wanted. Our construction loan specialists will guide you through every step.
NMLS #1577754 | Licensed in NJ, NY, CT, PA, MD, OH, GA
Equal Housing Lender. Construction loan terms, rates, and requirements subject to change. Borrower must meet qualification guidelines including credit, income, and property requirements. Down payment and closing costs required. Contact us for current rates and programs.