Construction Loans
Construction Loans are designed for those looking to build a new home or undertake major renovations. Construction loans provide the funds you need throughout the building process, with flexible terms and features tailored to your project’s needs.
Construction Loan - Key Features
Funds are disbursed in stages (draws) as construction progresses, rather than as a single lump sum
Interest-only payments during the construction phase; full principal and interest payments begin after construction is complete
Both fixed-rate and adjustable-rate options may be available
Single-close or two-close options: convert to a traditional mortgage after construction or close separately on a permanent loan
Loans available for primary residences, second homes, and investment properties
Loan amounts and terms vary by lender, with some offering up to 90% of the completed home’s value
Construction Loan - Key Features
Funds are disbursed in stages (draws) as construction progresses, rather than as a single lump sum
Interest-only payments during the construction phase; full principal and interest payments begin after construction is complete
Both fixed-rate and adjustable-rate options may be available
Single-close or two-close options: convert to a traditional mortgage after construction or close separately on a permanent loan
Loans available for primary residences, second homes, and investment properties
Loan amounts and terms vary by lender, with some offering up to 90% of the completed home’s value
Eligibility:
Minimum credit score typically required is 680, though some lenders may accept scores as low as 620
Down payment requirement is usually 20% to 25% of the project’s total cost
Debt-to-income ratio generally must be below 43% to 45%
Proof of stable income and assets to support loan payments
Detailed construction plan, including signed contracts, blueprints, budget, and payment schedule
Builder must be licensed, insured, and approved by the lender
Property appraisal based on the “subject to completion” value of the home
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NMLS 2042983
BRE 2126218
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