Construction Loans

A construction loan is a type of short-term mortgage used to finance the building of a home. It covers construction costs such as materials, labor, and permits. Once the construction is complete, you’ll need a regular mortgage to pay off the loan.

A construction loan is like a credit line that allows you to request funds to pay your builder for materials, supplies, and labor during construction. You’ll receive the funds in stages at specific milestones and pay the interest on the amount drawn to your builder.

The construction draw process pays your contractor in installments, or draws, from the construction loan. Instead of being paid in one lump sum, the contractor is paid out during the progression of the construction project to reimburse for labor and materials.

Throughout your home construction, you will only pay interest on your loan. The amount of interest billed is based on the funds drawn by your builder. As your builder draws more funds, your payments will gradually increase. This way, you can keep your costs low while your home is still under construction.

Building a new home may be more cost-effective than purchasing an older one, considering renovations, maintenance, and upgrades, which can add up over time. Also, a new home will comply with the latest building codes and feature updated wiring and plumbing, making it more energy-efficient and potentially saving you money in the long run.

Yes, that’s correct! If your land has a current appraisal showing equity, you can use some or all of that equity towards your down payment. This can be helpful for those with a significant amount of equity in their land.

Typically, self-building your own home is not allowed. However, licensed members with relevant experience and a strong financial position may be eligible to be their own general contractor. Previous recent experience in a related trade is necessary to demonstrate your ability to complete the project successfully.

Typically, no. During construction, you’ll only need to make interest payments, so your expenses will be minimal. However, depending on your financial situation, you may need to sell your home before being eligible for a construction loan.

No. All lenders require a clear title, and this situation can be a title problem.

To ensure the quality of the builders we work with, we require them to be licensed. Additionally, we must review your builder application before we approve your loan.