Question 1

How does a construction loan work?

Accepted Answer

We finance the land purchase and the build in one loan. Funds are disbursed in stages as construction progresses. When the home is complete, it converts to a permanent mortgage — one closing.

Question 2

Do I need to already own the land?

Accepted Answer

No. The construction loan can include the land purchase. If you already own the lot, its equity can count toward your down payment.

Question 3

How long does construction financing last?

Accepted Answer

Typically 9–12 months for the construction phase, then it converts to a 15- or 30-year permanent mortgage. Extensions are available if the build runs long.

Question 4

How are payments structured during construction?

Accepted Answer

Interest-only on the funds drawn so far. As the builder hits milestones and pulls more draws, your interest-only payment grows — but you're not making principal payments yet.

Question 5

Do I lock my rate before construction starts?

Accepted Answer

Yes — you can lock the permanent rate up front (one-time close) or float it and lock when the build is near completion (two-time close). Each has trade-offs.

Question 6

What credit score do I need for a construction loan?

Accepted Answer

Most construction programs want 680+ with 10–20% down. Stronger credit and reserves unlock better rates and easier draws.

Question 7

Can I use a VA or FHA construction loan?

Accepted Answer

Yes. VA and FHA both have one-time-close construction options. They're less common but powerful for veterans and FHA-eligible buyers building a custom home.

Question 8

Who chooses the builder?

Accepted Answer

You do — but the builder must be licensed, insured, and approved by the lender. We'll vet your builder up front so there are no surprises mid-project.

Construction

Key Features

Common Questions

Related Loan Types

Ready to move forward?