What Is a Construction Loan? | The 2 Mortgage Guys

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.

• window.open('https: Construction Overview How Ground-Up Construction Financing Works 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. At a Glance Two Ways to Structure Construction Financing Both paths fund the build in draws — but how you close and lock your permanent rate differs significantly. From Lot to Move-In Ready Understanding the construction loan timeline helps you plan builder contracts, move-out dates, and permanent payment start dates. Keep Exploring Related guides to help you compare options and move toward pre-approval. 2MG Daily Related Blog Posts Recent articles on construction loans, new builds, and custom home financing. {blogLoading ? ( ) : blogError ? ( Try Again
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