Construction & Renovation Loan
Ground-Up Construction
Build a new home, or a new investment property, from the ground up. A construction loan pays your builder in stages as the work is completed, and many convert to permanent financing once the home is finished.
- FundsLand, if needed, and the build
- Paid outIn draws as work is completed
- PropertyPrimary, second home or investment
- When completeConverts to, or is refinanced into, a permanent loan
How It Works
Built in stages, financed in stages.
A construction loan is sized from the land, the plans and the builder's budget. During the build, funds are released in draws after each stage is inspected, and interest is typically charged only on what has been drawn. When the home is finished, the loan converts to a permanent mortgage, or is paid off with one.
- 01
Plans, budget and a builder
You bring the plans, a detailed budget and a licensed builder. The lender reviews the builder and the project before closing.
- 02
An appraisal of the finished home
The appraiser values the home from the plans and specifications, and the loan is sized from that value and the total project cost.
- 03
We find a lender that builds
Construction programs differ in how they handle the land, the draws and the conversion. We match your project with a lender that fits and follow it through to completion.
Program Highlights
Why owners and investors build with a construction loan.
- Funds new builds with staged draw disbursements
- Available for primary homes, second homes and investment properties
- Converts to permanent financing once complete, or is refinanced into it
- Can include the purchase of the land, or use land you already own
- Draws are released after each stage is inspected
- Interest during construction is typically paid only on the amount drawn
Common Questions
What people ask about construction loans.
A construction loan finances the building of a new home. Instead of paying the full amount at closing, the lender releases funds to the builder in stages as the work is completed and inspected. When the home is done, the loan converts to, or is replaced by, a permanent mortgage.
You close before construction begins. The lender pays the builder in draws, usually after an inspection of each stage. During construction you typically make payments on what has been drawn so far. When the home is complete, the loan moves into permanent financing, either automatically with a one-time close or through a separate refinance.
If you already own the land, its value can often count toward your down payment or equity in the project, depending on the lender. The loan then covers the build, and the land and the new home together secure it.
Lenders look at your credit, income, down payment and reserves, and at the project itself, including the plans, the budget and the builder's license and track record. Requirements are usually stricter than for a purchase loan, because the home does not exist yet.
A one-time close, or construction-to-permanent, loan combines the construction loan and the permanent mortgage, with one application and one closing. A two-time close uses a separate construction loan, then a new mortgage when the home is finished. One-time close can save a second set of closing costs, while two-time close can offer more flexibility.
Start with a builder, plans and a budget. We then find a lender that offers construction financing for your type of project, review your numbers and coordinate the appraisal from the plans. After closing, the lender manages the draws until the home is finished.
General information only, not a commitment to lend. Loan programs, guidelines, interest rates and terms are subject to change without advance notice.
Plan your build across our lender network.
Tell us about the land, the plans and your builder. We will find a lender that fits the project and show you the numbers.