Build your perfect home with Mann Mortgage’s customized Construction Loans!
Construction loans make building Your Dream Home surprisingly easy and affordable.
What are construction home loans?
Construction loans provide a unique financial pathway that sets them apart from traditional mortgage loans. In this comprehensive guide, we aim to shed light on the intricate world of construction loans, equipping you with the knowledge you need to make well-informed decisions regarding your construction project in our Eugene Office. Whether you’re planning to build a new home from the ground up or undertake substantial renovations, understanding the ins and outs of construction loans is paramount. As we delve deeper into this guide, we’ll cover the fundamentals of construction loans, explain their inner workings, explore the various types available, delve into qualification requirements, and elucidate the nuances of interest rates and repayment. Additionally, we’ll address some frequently asked questions to provide further clarity on this financing option.
Not sure where to get started? That's okay too, we're happy to meet you where you're at and direct you to the right place or person.
The MannMade construction loan process.
Construction loans are short-term, typically one-year loans designed to fund the construction or renovation of a property. They differ from traditional mortgage loans as they focus on the building phase rather than long-term ownership.
- During the construction phase, borrowers receive funds in installments, known as “draws,” as the project progresses. These draws are used to pay contractors, suppliers, and other construction-related expenses.
There are two primary types of construction loans: construction-to-permanent and stand-alone construction loans. Construction-to-permanent loans transition into traditional mortgages after construction, while stand-alone loans require separate permanent financing.
Lenders typically require a solid credit score, detailed construction plans, a down payment, and a qualified builder to approve construction loan applications.
Construction loans often have variable interest rates and require interest-only payments during construction. Once construction is complete, the loan converts to a permanent mortgage with a fixed interest rate and regular principal and interest payments.
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Yes, construction loans can be used for significant renovations, not just new builds. Ensure you have detailed renovation plans and cost estimates when applying.
Down payment requirements vary but generally range from 20% to 25% of the project’s total cost. However, some lenders offer lower down payment options.
Lenders release funds in draws based on project milestones. Borrowers typically submit requests for these draws, which are reviewed and approved by the lender.
If construction costs exceed the initial estimate, borrowers may need to cover the additional expenses themselves or seek alternative financing options.
Yes, once the construction phase is complete, borrowers can refinance the construction loan into a traditional mortgage or explore other financing options to meet their long-term needs.
“I was always in the loop on my loan process. I loved the one-time close construction loan. It saved me thousands to be able to lock in the interest rate.”
Josue Gabriel Lopez
Let's get you home.
Borrow up to 97% of a home’s value with as little as 5% down. Our local loan experts will help guide you.
