How do construction loans work?
Answered by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
A construction loan funds the building of a home in stages, paying the builder as work hits milestones. During construction you usually pay interest only on the amount drawn so far.
Many Florida buyers use a construction-to-permanent loan that converts to a standard mortgage when the home is finished, so you close once. We coordinate the draw schedule and the conversion so the process stays smooth.
Funding a build in stages
A construction loan funds the building of a home in stages, called draws. As each phase finishes, the lender releases money to the builder. You usually pay interest only on the amount drawn during construction.
Once the home is complete, the loan converts to a standard mortgage or you refinance into one.
What to expect
Construction loans need detailed plans, a builder contract, and a larger down payment, often 20%. The lender inspects progress before each draw to protect everyone.
We guide Florida buyers through the build process. Reach out and we will map your construction financing.