Construction Loans
Construction loans: finance a build from the ground up
Construction loans pay for building a new home or investment property. Instead of one lump sum, funds are released in stages as the work moves forward.
Key facts
- Available in
- New York, New Jersey, Florida, Pennsylvania
- Used for
- New homes, investor and builder projects, and major rebuilds
- Funds
- Released in draws as stages of the work are completed and inspected
- Payments
- During the build, interest is generally charged only on what has been drawn
- You will need
- Plans, a budget and a qualified builder; permits as required
Who it's for
- Homeowners building a primary residence or second home
- Owners tearing down and rebuilding on their lot
- Investors building homes to sell or rent
- Builders and developers working on residential projects
Some construction loans convert to a regular mortgage when the home is finished, so you close only once. Others are short-term loans that you pay off by selling the property or refinancing. The right structure depends on whether you plan to live in the property, rent it or sell it.
Lenders review your finances along with the plans, budget, builder and projected value of the finished property. We compare lenders for your project and help keep the paperwork moving from the first draw to the final inspection.
Questions
How much do I need to put down?
It depends on the lender, the project and your finances. If you already own the land, it may count toward your equity.
Can I act as my own builder?
Some lenders allow it for experienced builders, but many require a licensed, insured general contractor.
What happens when construction is finished?
With a construction-to-permanent loan, the loan becomes a regular mortgage. With a short-term loan, you sell the property or refinance into long-term financing.
Can I buy the land with the same loan?
Often, yes. Many lenders can include the land purchase, or you can use land you already own.
Questions about Construction Loans?
A licensed loan officer will walk you through the numbers, usually the same day.