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Construction Loan

Construction Loan

A loan secured by real estate which is for the purpose of funding the

construction of improvements or building(s) upon the property.

A type of mortgage used to finance the cost of building or renovating a property. Unlike a traditional mortgage, construction loans are typically short-term and cover only the amount of funds needed during the construction phase. Once the project is completed, the borrower must then obtain a permanent mortgage to pay off the construction loan. The lender may disburse funds in stages based on the progress of the project, with the borrower paying interest only on the amount they have borrowed thus far. This type of financing can be used for a variety of projects, including home renovations, commercial construction, and even new home builds. While construction loans can be complex and require significant planning, they offer borrowers the flexibility to customize their property to their exact specifications.

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