Financing | Construction

: This loan automatically converts into a long-term mortgage (15 or 30 years) once the house is finished. It is popular because you only pay closing costs once.

Construction financing is a short-term, high-interest funding method used to cover the costs of building a new home or commercial property from the ground up. Unlike a traditional mortgage, which provides a lump sum to buy an existing home, construction loans are disbursed in stages—known as "draws"—as specific building milestones are reached. Core Concepts of Construction Loans

: This includes your building plans, materials list, and project timeline. construction financing

: During construction, you generally only pay interest on the funds that have already been drawn, rather than the full loan amount.

: Determine your budget before paying for architectural plans. : This loan automatically converts into a long-term

: This covers only the build phase. Once the home is complete, you must pay off the loan in full, usually by taking out a separate mortgage. This involves two separate closings and two sets of fees.

: Once closed, construction begins and the lender starts the draw-and-inspection cycle. Unlike a traditional mortgage, which provides a lump

AI responses may include mistakes. For financial advice, consult a professional. Learn more What Are Construction Loans And How Do They Work?