Construction

Custom home builders

Build your dream home with a single-close construction loan. One application, one closing, one payment. From dirt to done.

Program Overview

How Construction Loans Work

A construction loan finances the building of a new home from the ground up. Unlike a traditional mortgage where you receive the full loan amount at closing, construction loan funds are disbursed in stages (called "draws") as the builder completes defined phases of construction.

A key advantage of a single-close construction loan is that it combines the construction financing and permanent mortgage into one loan with one application, one approval, one closing, and one set of closing costs. When construction is complete, the loan automatically converts to a standard permanent mortgage with the rate you locked at the beginning.

During the construction phase (typically 9 to 12 months), you make interest-only payments on the amount that has been disbursed, not the full loan amount. This keeps your payments manageable while your home is being built. Once the builder obtains the certificate of occupancy and your final inspection is complete, your loan converts and regular principal-and-interest payments begin.

Construction loans are available with conventional, FHA, and VA financing. The lot purchase can often be included in the loan, and if you already own the land, your equity in the lot can count toward your down payment. Each draw is inspected to confirm the work was completed before funds are released to the builder.

Key Features

  • Single-close: one loan, one closing, one set of fees
  • Interest-only payments during the construction phase
  • Automatic conversion to permanent mortgage upon completion
  • Lock your permanent rate before construction begins
  • Lot purchase can be included in the loan
  • Available with conventional, FHA, and VA programs
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The Process

How It Works

1

Builder Selection and Plans

You select your builder and finalize your building plans, specifications, and budget. The builder must be an approved, licensed contractor. We review the construction contract and budget before proceeding.

2

Loan Application and Approval

We process your application based on your financial profile and the construction plans. The property is appraised based on the completed plans ("as-completed" value). You lock your permanent rate at this stage.

3

Construction Phase with Draw Disbursements

After closing, the builder begins work. Funds are released in stages as the builder completes each phase (foundation, framing, roofing, etc.). Each draw is preceded by an inspection confirming the work is done.

4

Conversion to Permanent Mortgage

When the home is complete and the certificate of occupancy is issued, the loan converts to your permanent mortgage. No second closing, no second set of fees, no requalification.

Ideal Borrower

Who This Program Is For

Construction loans are for buyers who want to build a custom home or a new build on their own lot, rather than purchasing an existing home.

Buyers building a custom home on their own lot
Families purchasing a lot and home package from a builder
Homeowners demolishing an existing structure to build new
Buyers in areas with limited existing inventory who prefer to build
Veterans using their VA benefit to build (VA single-close construction available)

Run the Numbers

Use our calculator to explore payment scenarios, compare options, and see how a construction loan could fit your financial plan.

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Common Questions

Construction FAQ

Most construction loans allow 9 to 12 months for building, with extensions available if needed. The exact timeline depends on the complexity of the project, weather, material availability, and your builder's schedule.
Most lenders require a licensed general contractor. Owner-builder programs exist but are rare and typically require significant construction experience. The requirement for a licensed contractor protects you and the lender by ensuring the project is managed professionally.
Your construction budget includes a contingency reserve (typically 5-10% of the construction cost) to cover unexpected expenses. If costs exceed the contingency, you may need to cover the difference out of pocket or modify the scope of work.
No. Many construction loans include the lot purchase in the financing. If you already own the lot, your equity in it can count toward your down payment requirement, potentially reducing or eliminating additional cash needed.

Ready to Explore Construction Loans?

Let our team walk you through the details, run the numbers for your situation, and help you decide if this is the right program for your goals.

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