Financing a home that has not yet been built can involve additional review of the property, construction plans, budget, builder, schedule, and future mortgage. Loan structures vary: some combine the construction and long-term mortgage phases, while others use separate financing. Do not assume one structure is available until a lender confirms it for your project.
Gather the project details
Before an initial discussion, collect the information you already have about:
- The land and how it will be acquired or held
- Your builder and construction agreement
- Plans, specifications, permits, and expected completion date
- Itemized construction budget and contingency
- Your expected occupancy and the type of home
- The amount and timing of funds needed
Requirements can differ by product and state. Ask which documents are needed before signing a construction contract or paying nonrefundable costs.
Understand how the financing is structured
Ask whether the loan has a construction-only period and a separate permanent mortgage, or whether both stages are combined. Confirm when the loan closes, how rates and payments work during construction, how funds are disbursed, and what happens when the project is complete.
A “one-time close” does not mean the project has no conditions or additional costs. Ask about builder review, inspection or draw administration, appraisal, interest during construction, fees, rate-lock timing, and what happens if the work runs late or exceeds budget.
Questions for the builder and lender
- Is the builder eligible for this loan program?
- Who reviews plans, budget changes, permits, and draw requests?
- What documentation is needed before construction begins?
- How are change orders handled?
- What is the contingency requirement?
- What payment is due during construction?
- When must the home be completed and occupied?
- What happens if the builder, schedule, or project scope changes?
Compare the full path
A construction loan is tied to both the current project and the long-term financing plan. Review the fees, payment structure, interest-rate terms, completion requirements, and future mortgage terms. If the project or builder changes, contact the lender before making assumptions about eligibility.
These guides are educational and do not determine whether a loan is available or suitable for you. Product terms and eligibility vary.