Construction Loan
Why do a Construction Loan?
Benefits of a Construction Loan
- Flexible Financing: Designed to meet the unique needs of building a home.
- Staged Disbursements: Funds are released in phases as construction progresses.
- Interest-Only Payments: Borrowers pay interest only on the funds used during construction.
- Mortgage Conversion Option: For primary residences, the loan can transition into a standard long-term mortgage upon completion.
Loan Options
- Primary Residence Construction Loans – Qualified borrowers can build their home with as little as 5% down.
- Investor Construction Loans – A minimum 20% down payment is required for investment properties.
How the Process Works
- Initial Approval: Lenders evaluate income, credit score, and construction plans.
- Fund Disbursement: Loan funds are distributed in stages (referred to as "draws") based on project milestones.
- Transition to Mortgage: If the property is a primary residence, the loan may convert into a traditional mortgage upon completion. Investors may need to refinance or sell the property.
Common Requirements
- Detailed Construction Plans and Cost Estimates – A comprehensive project outline is required for lender approval.
- Licensed Builder or Contractor – Self-construction is not permitted; a licensed professional must oversee the project.
- Down Payment Requirements:
- Primary Residence: As low as 5% down
- Investment Property: Minimum 20% down
- Credit Score Standards: Typically 680+, depending on the loan program.
Who Qualifies for a Construction Loan?
- Individuals planning to build a custom home for personal use.
- Landowners seeking financing to begin construction.
- Investors looking to develop residential properties for sale or rental.
Ready to build? Let’s discuss your construction loan options today!
Whether you're building your dream home or investing in new construction, we're here to guide you through every step of the process. Contact us today to explore your options and see if you qualify for our Construction Loan Program.