New Construction Loans
New construction loans provide financing to build a home from the ground up, covering land acquisition, materials, labor, and related costs throughout the building process.
How Construction Loans Work
Construction financing is typically structured in phases. Funds are disbursed in draws as the project hits milestones — foundation, framing, mechanical systems, and final completion. Once the build is finished, the loan either converts to a permanent mortgage or is refinanced into one.
One-Time Close vs. Two-Time Close
A one-time close combines the construction loan and the permanent mortgage into a single transaction, locking in terms upfront. A two-time close involves separate closings — one for the build phase and one for the permanent loan — which offers more flexibility but involves two sets of closing costs.
What You Will Need
Lenders generally require approved building plans, a licensed and insured builder, a detailed construction budget, and a timeline for completion. An appraisal is typically based on the projected value of the finished home rather than the current lot value.
Who Benefits
Buyers who want a custom-built home, investors developing new properties, or homeowners rebuilding on existing land can all benefit from construction financing. It allows you to finance the entire building process rather than paying out of pocket during construction.
Construction loan availability, terms, and requirements vary based on the lender, property type, and borrower profile. Contact the mortgage team to discuss your building project.