Construction Loans
Construction Loans are designed for those looking to build a new home or undertake major renovations. Construction loans provide the funds you need throughout the building process, with flexible terms and features tailored to your project’s needs.
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Construction Loan – Key Features
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Funds are disbursed in stages (draws) as construction progresses, rather than as a single lump sum
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Interest-only payments during the construction phase; full principal and interest payments begin after construction is complete
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Both fixed-rate and adjustable-rate options may be available
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Single-close or two-close options: convert to a traditional mortgage after construction or close separately on a permanent loan
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Loans available for primary residences, second homes, and investment properties
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Loan amounts and terms vary by lender, with some offering up to 90% of the completed home’s value
Eligibility:
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Minimum credit score typically required is 680, though some lenders may accept scores as low as 620
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Down payment requirement is usually 20% to 25% of the project’s total cost
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Debt-to-income ratio generally must be below 43% to 45%
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Proof of stable income and assets to support loan payments
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Detailed construction plan, including signed contracts, blueprints, budget, and payment schedule
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Builder must be licensed, insured, and approved by the lender
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Property appraisal based on the “subject to completion” value of the homeC