Construction loan planning
Construction loans connect the financing plan to the building plan. Before comparing lenders, define the property, land ownership, intended use, project scope, builder, budget, and expected timeline. A construction-only loan and a construction-to-permanent loan can have different repayment and closing steps; availability depends on the lender and the complete project.
Choose the structure to compare
A construction-only loan generally funds the build for a shorter period and may require separate permanent financing later. A construction-to-permanent structure may convert to a longer-term mortgage when construction is complete. Ask whether there will be one closing or more than one, when the interest rate is set, how payments work during construction, and what happens if the project takes longer than planned. The Consumer Financial Protection Bureau describes construction loans and notes that funds are often advanced as work progresses.
Prepare the project records
Discuss plans and specifications, permits, a signed builder contract, a detailed budget, schedule, insurance, and how the land will be valued. Ask who approves each draw, whether inspections are required before an advance, and how changes to scope or costs will be handled. Allow room in the planning conversation for delays, cost overruns, and the date the home can be occupied. A lender may also review the borrower’s income, assets, debts, credit, and reserves.
Compare total costs and timing
Request written details on rate, fees, draw process, payment during construction, and the terms of any permanent mortgage. Ask whether another application or closing would be required at completion. The CFPB construction-loan disclosure FAQ distinguishes construction-only from construction-permanent structures for applicable consumer mortgages. Compare the complete project financing, not just an initial interest rate.
Browse NorthStar Funding’s purchase path or contact us with the project location, builder status, and budget range. Do not send sensitive financial documents through the general contact form. Current lender guidelines and underwriting determine whether a particular construction loan is available.