Home Sweet Home. You might find the perfect home that’s move in ready, while on the other hand, the only way to get what you truly want is to build a new home from the ground up. You will need to acquire land, find a builder, develop a plan, gather cost estimates, and secure funding for the construction. Residential construction loans exist to help you build the home of your dreams. They’re distinctly different from a home loan.

Here are 3 primary differences between residential construction loans and a home loan:

  1. Residential construction loans are generally short-term loans. Home loans have varying terms and range anywhere from 10 to 30 years in length.
     
  2. Residential construction loans can provide you with upfront funds to purchase land you wish to build on. Home loans do not generally service land purchases.
     
  3. Residential construction loans are dispersed in phases. The loan pays out as progress is made on the project. Generally broken down into phases, the money is disbursed as each phase is completed or as the funds are needed.

Once you have completed the home and are set to move in, the construction loan will need to be refinanced into a term loan of 15 years, 20 years, or 30 years. You will need to reapply and qualify for permanent financing. As a resource, check out this Mortgage Qualification Calculator to determine the size of the home loan you might qualify for.

Not all lenders offer residential construction loans, but we do! If you are thinking about building the home of your dreams, we invite you to contact any of our Home Loan Lenders with any residential home loan questions you may have. 

Ready to apply for your loan? Click here to begin the process.