Build Your Dream Home with Construction Loan Financing

A construction-to-permanent loan (also called a single-close or one-time-close loan) combines construction financing and permanent mortgage into a single loan with one closing. This differs from traditional construction financing where you need two separate loans—a short-term construction loan that must be paid off and refinanced into a permanent mortgage after completion. With our program, you close once, lock your permanent rate upfront, and automatically convert to a traditional mortgage when construction is complete, saving thousands in duplicate closing costs and eliminating rate risk during construction.

Down payment requirements typically range from 5% to 20% depending on your credit profile, loan amount, and property type. First-time builders with strong credit (720+) may qualify with as little as 5-10% down, while spec builders or investment properties usually require 20-25% down. The down payment can come from cash, proceeds from selling your current home, or equity from land you already own. We'll work with you to structure the down payment that best fits your financial situation and construction project.

Construction funds are released in scheduled installments called 'draws' as specific construction milestones are completed and verified through professional inspections. Typical draw schedules include: foundation completion, framing and roof completion, rough plumbing/electrical, drywall and interior finishes, and final completion. Before each draw, we conduct an on-site inspection to verify the work matches your approved plans and budget. You only pay interest on the cumulative amount drawn, not the total loan amount, keeping your costs lower during construction.

If construction costs exceed your original approved budget, you have several options depending on the circumstances. Minor overruns (5-10%) can often be covered through contingency reserves built into most construction budgets. For larger overruns, you may need to provide additional cash, reduce scope elsewhere in the project, or apply for a loan increase (subject to reapproval and additional appraisal). This is why we emphasize thorough planning, detailed cost estimates, and working with experienced contractors during the application process—preventing budget overruns is much easier than resolving them mid-construction.

Most construction loan programs require you to use a licensed, insured general contractor with verifiable experience and references. However, some lenders offer 'owner-builder' or 'self-general contractor' programs if you have documented construction experience, proper licensing, and can demonstrate project management capability. Using a family member as contractor is possible if they meet all professional licensing, insurance, and experience requirements and agree to formal contractor agreements. We evaluate these situations individually, as proper contractor oversight is essential for protecting both your investment and our collateral during construction.

Construction loans typically require minimum credit scores of 680-700, though we can work with scores as low as 640 in some cases with larger down payments and compensating factors. Income documentation requirements are similar to traditional mortgages—most borrowers provide W-2s, pay stubs, and two years of tax returns. Self-employed applicants need two years of business tax returns and may use bank statement programs if they write off significant business expenses. Additionally, we'll evaluate your cash reserves (typically requiring 6-12 months of payments as reserves), debt-to-income ratios, and construction project feasibility when making approval decisions.

Initial pre-qualification can be completed within 1-3 business days once we receive your application and supporting documents. Full approval including property appraisal, builder verification, and construction plan review typically takes 2-4 weeks. The appraisal is critical—the appraiser must review your construction plans and provide an 'as-completed' value, which takes longer than standard home appraisals. Once approved, you can close on the construction loan within 7-10 business days. Total timeline from application to closing averages 4-6 weeks, though complex projects or unique properties may take longer.

We finance a wide variety of construction projects including: new single-family custom homes on your own lot, spec homes built by contractors for future sale, substantial renovations or additions that require permits and licensed contractors, modular or manufactured home installation on permanent foundations, and tear-down rebuilds where you demolish an existing structure and build new. We typically cannot finance projects on non-traditional foundations, commercial properties, or construction without proper permits and licensed contractors. Each project type has specific requirements, so contact us to discuss your specific construction plans and financing needs.