Construction Loan
A construction loan is short-term financing that funds the building of a home in stages, converting to or being replaced by a permanent mortgage when complete.
What Construction Loan means
Funds release in draws as construction milestones are met, and you typically pay interest only on the amount drawn. A construction-to-permanent loan rolls into a regular mortgage once the home is finished.
Florida example
A Florida buyer building in a new Polk County development draws funds for foundation, framing, and finish work, paying interest on each draw. At completion and certificate of occupancy, the loan converts to a 30-year fixed mortgage.
Funding a build in stages
A construction loan funds building a home in stages called draws. As each phase finishes, the lender releases money to the builder. You usually pay interest only on what has been drawn.
When 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 often a 20% down payment. The lender inspects progress before each draw.
We guide Florida buyers through new builds. Reach out and we will map your construction financing.
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Verify the details for your own situation against these government and agency sources: CFPB Owning a Home guide and HUD homebuyer resources.