A construction loan finances building a new home from the ground up — whether you are buying land and building or constructing on a lot you already own. Funds release in draws as work progresses, and the loan converts to a permanent mortgage when the build is complete.
Unlike a standard purchase loan on a finished home, a construction loan covers the cost of building — land purchase when guidelines allow, builder contracts, materials, permits, and soft costs. The lender underwrites based on the completed value of the home, not just raw land or a slab in progress.
Construction dollars are not disbursed all at once. They are released in draws as your builder hits milestones — foundation, framing, mechanicals, drywall — with inspections confirming work before each payment. During the build you typically make interest-only payments on funds that have been drawn, not the full loan amount.
When construction finishes and a Certificate of Occupancy is issued, the loan either converts automatically to a permanent mortgage (one-time close) or you close a new permanent loan (two-time close). Ryan and Steve align your builder timeline, lot plan, and closing structure before you sign a contract — so there are no surprises mid-build.
Both paths fund the build in draws — but how you close and lock your permanent rate differs significantly.
Understanding the construction loan timeline helps you plan builder contracts, move-out dates, and permanent payment start dates.
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Related guides to help you compare options and move toward pre-approval.
Single closing for construction and permanent financing — how it works and who it fits.
Separate construction and permanent loans — two closings and rate-shopping flexibility.
When funds release during the build and what inspections trigger each draw.
Program options, timelines, and the full construction financing hub.
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Know your building budget and closing structure before you sign with a builder. Ryan & Steve can match you to the right one-time or two-time close program — not a commitment to lend; subject to credit and property approval.