What is a construction loan?

A construction loan is short-term financing used to build a new home or make major renovations. It covers the cost of land, labor, materials, and permits. Once construction is complete, the loan converts to a permanent mortgage or is paid off with a separate mortgage.

How does a construction-to-permanent loan work?

A construction-to-permanent loan (also called a one-time close loan) combines the construction loan and permanent mortgage into a single loan with one closing. This saves on closing costs and simplifies the process. You make interest-only payments during construction, then begin regular mortgage payments when the home is complete.

What down payment is required for a construction loan?

Construction loans typically require 20-25% down payment. Some programs offer lower down payments for well-qualified borrowers. The down payment is based on the total project cost (land plus construction costs) or the appraised value of the completed home, whichever is less.

How are construction loan funds disbursed?

Construction loan funds are disbursed in stages called "draws" as construction progresses. Typically, there are 4-6 draws throughout the project. An inspector verifies work completion before each draw is released to the builder. This protects both you and the lender.

Can I be my own general contractor?

Some lenders allow owner-builders, but requirements are strict. You typically need construction experience and may need to provide a larger down payment. Most lenders prefer working with licensed, insured general contractors to reduce risk and ensure quality construction.

How long does a construction loan last?

Construction loans typically have terms of 12-18 months to complete the build. Extensions may be available if needed, though they may incur additional fees. It is important to have realistic timelines and contingency plans for potential delays.

Construction Loans | Q Home Loans

What is Construction?

Building a home can be one of the biggest decisions you make. New construction comes with many questions and decisions, but we make the loan process a breeze with our dedicated construction team and loan officers specifically certified in construction financing. Construction loans can have a one-time close (wrapping construction and long-term financing into one transaction) or a two-time close (separate construction financing and permanent financing). We guide you through every step from budget planning to move-in.

Why Choose Construction Loans?

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One-Time or Two-Time Close

Choose between one-time close convenience or two-time close flexibility based on your needs

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Interest-Only During Build

Pay only interest during construction phase, reducing your monthly payments

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Expert Construction Team

Work with loan officers specifically certified in construction financing

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Complete Budget Planning

Get help figuring out your budget and understanding all costs involved

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Flexible Timeline

Two-time close option provides flexibility for your build schedule

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Permanent Financing Included

Seamless transition from construction to permanent mortgage financing

Frequently Asked Questions

Get answers to common questions about construction loans.