Construction Home Loans

A construction home loan is a short-term loan used to finance the building of a new home or major renovations on an existing home. Unlike traditional mortgages, which are based on the home's current value, construction loans are based on the projected value of the home once the construction or renovation is complete. These loans are typically disbursed in stages, known as "draws," as the construction progresses, ensuring that funds are available as needed.

• Customized Financing
  • Construction loans are tailored to meet the specific needs of your building project, allowing for flexible terms and disbursement schedules that align with the construction timeline.
• Interest-Only Payments During Construction
  • During the construction phase, borrowers typically make interest-only payments on the loan amount disbursed, which can help manage cash flow until the project is completed.
• Control Over the Project
  • With a construction loan, you have greater control over the construction process and the ability to make modifications as needed to ensure your new home meets your exact specifications.
• One-Time Close Options
  • Some lenders offer one-time close construction loans, which combine the construction financing and the permanent mortgage into a single loan, simplifying the process and saving on closing costs.
• Potential to Increase Home Value
  • Financing home construction or significant renovations can increase the value of your property, providing a potential return on investment beyond the initial cost.
• Flexible Use of Funds
  • Construction loans can be used for various types of building projects, including new home construction, major renovations, and home additions.

To qualify for a construction home loan, borrowers generally need to meet the following criteria:

• Good Credit Score: A minimum credit score of 620 is typically required, though higher scores are preferred for better interest rates and terms.
• Down Payment: A down payment of 20-25% is usually required, depending on the lender and the specifics of the project.
• Stable Income and Employment: Proof of steady income and employment history is necessary to demonstrate the ability to repay the loan.
• Detailed Construction Plan: A comprehensive construction plan, including a timeline, budget, and specifications, must be provided to the lender.
• Qualified Builder: The builder must be licensed and approved by the lender to ensure they meet all necessary standards and regulations.

Construction home loans offer a flexible and tailored financing solution for building your dream home or undertaking major renovations. With customized terms, interest-only payments during construction, and the potential to increase your property's value, these loans provide the financial support needed to bring your vision to life. Whether you're constructing a new home from the ground up or making significant improvements to your existing home, a construction loan can help you achieve your goals.

For more information or to start your construction home loan application, contact us today. We are here to guide you through every step of building your dream home!