If you are purchasing the land separately there should be an initial loan payment. If you already hold a loan on the property where you are planning to build, the first disbursement of the construction loan will pay off the land loan before the construction begins. A timetable for the home’s construction period should also be included. This will help determine the number of distributions (or draws) from the loan that will be given to the builder to pay for various milestones during the construction phase.

Draws of the funds are usually at prescribed completion points, requiring that inspectors approve the progress. It should also include how the loan will convert to a mortgage after the construction phase is complete. Some banks offer interest-only payments during the construction phase and a one-time closing at the start of construction.

Flexible down payment options and a locked interest rate at the start of construction. This one-step loan converts to a mortgage once construction is complete. The advantage to this type of loan is that you will only have to pay closing costs one time. Some lenders prefer a less risky, two-step process that requires you to take out an interest-only loan for construction and then refinance into a regular mortgage upon completion. The short-term interest-only loan is usually at a prime plus rate, while the latter options reflect regular mortgage rates.

A construction loan can be used to cover the cost of the land, contractor labor, building materials, permits & more. It’s important to discuss these items with your lender, specifically what will be included in your loan-to-value calculation.

Often, construction loans will include a contingency reserve to cover any unexpected costs that could arise during construction, which also serves as a cushion in case the borrower decides to make any upgrades once the construction begins.

Below are some of Front Light’s recommended lenders:

BB&T
Monica Howard,
Email: Mrhoward@bbandt.com
Hae Min Koo,
Email: Hkoo@bbandt.com

TD BANK
Joe Green,
Email: Joseph.Green@TD.com
Ali Mahini,
Email: Ali.Mahini@TD.com
Matt Webster,
Email: Matt.Webster@TD.com

SYNOVUS BANK
Maggie Blank,
Email: Maggieblank@synovus.com

CBC MORTGAGE
Robert Askew,
Email: Robert.Askew@cbcnationalbank.com
Kim Gentry,
Email: Kgentry@cbcnationalbank.com
Renee Johnson,
Email: ReneeJ@cbcnationalbank.com

GMFC MORTGAGE
Maggie Blank,
Email: Maggieblank@synovus.com

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If you are purchasing the land separately there should be an initial loan payment. If you already hold a loan on the property where you are planning to build, the first disbursement of the construction loan will pay off the land loan before the construction begins. A timetable for the home’s construction period should also be included. This will help determine the number of distributions (or draws) from the loan that will be given to the builder to pay for various milestones during the construction phase.

Draws of the funds are usually at prescribed completion points, requiring that inspectors approve the progress. It should also include how the loan will convert to a mortgage after the construction phase is complete. Some banks offer interest-only payments during the construction phase and a one-time closing at the start of construction.

Flexible down payment options and a locked interest rate at the start of construction. This one-step loan converts to a mortgage once construction is complete. The advantage to this type of loan is that you will only have to pay closing costs one time. Some lenders prefer a less risky, two-step process that requires you to take out an interest-only loan for construction and then refinance into a regular mortgage upon completion. The short-term interest-only loan is usually at a prime plus rate, while the latter options reflect regular mortgage rates.

The process for securing a home construction loan will differ from other types of home loans you may have had in the past. The first step is to talk to your loan officer. A loan officer should answer your questions about how construction loans are structured, how to get qualified, etc.

The loan officer will ask you about your basic debt, income, and asset information and you will need to have a signed construction or purchase contract with your builder. The contract will detail certain aspects that will impact your loan, such as; Contract amount [which could include construction & cost of land] | Construction start & completion dates.

A construction loan can be used to cover the cost of the land, contractor labor, building materials, permits & more. It’s important to discuss these items with your lender, specifically what will be included in your loan-to-value calculation.

Often, construction loans will include a contingency reserve to cover any unexpected costs that could arise during construction, which also serves as a cushion in case the borrower decides to make any upgrades once the construction begins.