Financing the home you're creating.
Construction financing is a two-phase process: an interest-only draw period during the build, then conversion to a long-term mortgage.
Direct answer
Construction loans fund the build in draws tied to project milestones and typically convert to a permanent mortgage once the certificate of occupancy is issued.
Key takeaways
- 01
Funds release in scheduled draws against completed milestones.
- 02
Interest accrues only on drawn funds during construction.
- 03
Many loans convert to a permanent mortgage without a second closing.
How draws work
The lender releases funds in stages tied to inspections at defined build milestones.
Construction-to-permanent
Single-close products convert to a fixed or adjustable-rate permanent mortgage at completion.
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Frequently asked
Do I need a builder approved by the lender?
Most construction lenders review the builder as part of underwriting. Confirm builder requirements early.
How is payment structured during construction?
Most products are interest-only on drawn funds until completion, then convert to fully amortizing.
Can I renovate an existing home?
Yes — renovation loans finance the purchase or refinance plus improvements in a single loan.
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