Build Your Future With Confidence
Bring the vision for your dream home to life and plan for the future with flexible financing that can be tailored to fund each stage of your project.
What Is a Construction Loan?
Tailored to project scope
Borrowers can secure financing that is customized to their budget and project needs to make sure expenses are covered from start to finish.
Funds disbursed at construction milestones
Phased disbursement of funds gives builders and contractors access to funds as needed to cover labor and materials to prevent project delays.
Smooth transition to a mortgage
Once construction is complete, borrowers can transition seamlessly into an "end loan" that simplifies the financing process and eliminates the need for a separate mortgage application.
What Can a Construction Loan Be Used For?
Custom home designs
A construction loan can be used to finance the building of a custom-designed home that meets the specific needs of the borrower.
Renovation projects
Construction loans can also cover the costs of renovations and remodeling for existing homes.
Accessibility updates
Borrowers who need to make accessibility updates, like installing a wheelchair ramp or modifying a bathtub, can use a construction loan to cover the costs of necessary upgrades.
Pros
- Increased property value compared to older homes
- Streamlined disbursement process to fit your project timeline
- Includes warranties for structural defects
Cons
- Higher upfront costs
- Construction delays can increase loan fees
- Difficulty estimating final costs
Talk to our mortgage experts today about finding the right loan for you.
Alternatives to a Contruction Loans
- Ideal for renovations to existing housing
- Borrowers can use their home equity as collateral
- Make interest-only payments during the draw period
- Refinance your existing home
- Take out more than what you owe
- Increases loan balance and repayment period
- Available with fixed or adjustable interest rates
- Offers a straightforward approach to construction financing
- Can be used with down payment assistance for a primary home
How Do I Know If a Construction Loan Is Right for Me?
You want to maintain control over your home layout and design
A construction loan allows borrowers to build their home from the ground up and gives them the flexibility to customize their space.
You're looking for modern, energy-efficient features.
While older homes may have outdated appliances and poor quality insulation that contributes to energy waste, new homes are built with the latest technology and modern design features. This translates to lower utility costs for you and a reduced carbon footprint for the environment.
You want to defer maintenance costs by a couple of years.
New homes generally require less maintenance and repairs then older homes that have sustained more wear and tear over time. This gives borrowers peace of mind that for at least a few years, there won't be any major issues to deal with.
When Is the Best Time to Use a Construction Loan?
A construction loan is best used when you’re ready to invest in your dream home or when you need specific accommodations that you’re unlikely to find in an existing house. That said, it’s important that you are financially stable and prepared for potential setbacks when building your own home.
Get In Touch With A Loan Officer Today
FAQ
What types of construction loans are available?
There are generally two types of new construction loans. Borrowers can choose a construction-to-permanent loan that converts into a standard mortgage after construction or a stand-alone construction loan that requires separate permanent financing.
What will I need to have when I apply for a new construction loan?
To qualify for a construction loan, borrowers typically need to have sufficient income, a good credit score, a healthy down payment, and detailed construction plans and cost estimates to show.
How is the loan disbursed during the construction process?
Funds are typically disbursed in stages or “draws” based on the completion of construction milestones. Usually, an inspection is required before each draw.
What is "builder’s risk insurance?"
Ready to Go?
Apply Now
Have Questions?
Get Them Answered
Borrowing Is Better with NYFTY Lending
Find Your Loan Officer Today
Connect with a loan expert near you to get started.
