What a Conventional Construction Loan Is
A conventional construction loan finances building a new home — land, materials, and labor during construction — then converts to or is replaced by a permanent mortgage once complete.
Who It's For
- Buyers building a primary or second home from the ground up
- Those who own their lot and need construction financing
- Borrowers who prefer conventional terms over FHA/VA construction
- Owner-builders working with a licensed contractor
How It Works
Funds release to your builder in stages (draws) as milestones are met, so you aren't paying interest on the full amount upfront. Many programs offer a one-time-close structure rolling construction and permanent financing into a single loan, avoiding a second closing.
Frequently Asked Questions
How are funds disbursed during construction?
In draws tied to construction milestones, so you pay interest only on what's been drawn, not the full loan amount.
Is this a one-time or two-time close?
Both structures exist. A one-time close combines construction and permanent financing in a single closing; a two-time close separates them. We can compare which fits your project.
What down payment is needed?
Conventional construction loans typically require a meaningful down payment; the exact amount varies by lender and project. We'll give you specifics for your scenario.