How Does a Construction Loan Work?

In order to determine how much you can borrow for a construction loan, you must first identify how much the build will cost. When the cost of construction has been estimated with the help of a builder, you can move onto the step of finding out how much you can afford to borrow. At this time, it is wise to obtain an actual approval for the construction loan amount, so you can proceed knowing fully what to expect from the loan.

Determine whether you prefer to shop around for a mortgage after the construction completion, or if you prefer to choose a construction loan that will convert into a standard mortgage. We offer a few different options to help you come up with the type of construction loan to best meet your needs and preferences.

Once you know which type of loan you desire, we will work with you to approve the builder of your choice, who will then take your construction plans and obtain various bids to come up with a total cost for your new home. With these bids, the builder will create a proposal to present to us, which we will need to approve before construction can begin. However, if we provide approval of the builder’s proposal, you can move forward with the initial lending paperwork to put the construction process in motion.