A home construction loan is a short-term, specialized financing option used solely for the costs associated with building a new home. Unlike a traditional mortgage, which finances the purchase of an existing home, a construction loan covers only the building phase. Once the home is complete, you apply for a standard mortgage to pay off the construction loan and secure long-term financing.

For those starting from scratch or undertaking significant renovations, there are various financing options available. One efficient choice is the Construction-to-Permanent Financing solution. This all-in-one loan covers the lot purchase and construction costs and then seamlessly converts into a permanent mortgage upon completion. During the construction period, you’ll make only interest payments, and the process involves a single set of closing costs and paperwork, which can help save you money.