Construction financing process

  • What is permanent financing?

    Permanent financing is a form of long-term financing.
    The loan terms are at least 12 months, though most loans are much longer.
    These flexible loans give you several options for your repayment schedule, including monthly, annual, or small lump-sum payments..

  • Interim financing is short-term capital, usually a loan, used to cover funding gaps at any point in the development process that arise from having multiple sources of funds that are not necessarily aligned in their timing.
  • Permanent financing is a form of long-term financing.
    The loan terms are at least 12 months, though most loans are much longer.
    These flexible loans give you several options for your repayment schedule, including monthly, annual, or small lump-sum payments.
Aug 10, 2023With a construction-to-permanent loan, you borrow money to pay for the cost of building your home. Once the house is complete and you move in,  Types of construction loansHow to get a construction loan
During construction, the lender will release your funds in a series of payments, called “draws.” Typically, the lender will require an inspection between draws to check that the project is proceeding as planned. As the borrower, you are responsible for paying interest on the amount of funds you use.

Can a construction loan be refinanced?

After construction of the house is complete, the borrower can either refinance the construction loan into a permanent mortgage or obtain a new loan to pay off the construction loan (sometimes called the “end loan”).
The borrower might only be required to make interest payments on a construction loan while the project is still underway.

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How do I apply for a construction loan?

Thorough application process:

  • When you apply for a construction loan
  • you’ll be asked to provide the details of your construction project
  • including :
  • like the total amount of funding required
  • details about the builder
  • a detailed project timeline
  • the floor plans or construction drawings
  • the cost of materials
  • and the cost of labor.
    • ,

    How does a construction loan turn into a mortgage?

    Many borrowers ask how a construction loan turns into a mortgage.
    After the house is complete and the term of the loan ends (usually only one year), the borrower can refinance the construction loan into a permanent mortgage.
    Alternatively, the borrower can apply for a new loan (often called and “end loan”) to pay off the construction loan.


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