How Construction Financing Works
Unlike a traditional mortgage where you receive the full amount at closing, a construction mortgage releases funds in stages โ called "draws" โ as your build progresses. This protects both you and the lender by tying funding to verified construction progress.
Typical draw stages are: foundation complete, framing complete, lock-up (windows and doors), drywall complete, and final completion. An inspector verifies each stage before funds are released.
During Construction
During the construction phase, you typically only pay interest on the funds drawn โ not the full mortgage amount. This keeps your carrying costs lower while your home is being built.
What I Finance
- Custom Single-Family Homes: Owner-built or contractor-built
- Duplex & Triplex: Two and three-unit new builds
- Fourplex: Four-unit buildings (qualifies for high-ratio insurance)
- Pre-Construction: New development purchases
- Major Renovations: Gut-renovations treated as construction
Land Purchase + Construction
I can structure combined financing that covers both your land acquisition and your construction costs under a single mortgage facility โ simplifying the process and reducing your closing costs.
Builder or Self-Build
Whether you're working with a licensed general contractor or managing the build yourself (owner-builder), I have lenders for both approaches. Owner-builder programs require more documentation but are available for qualified borrowers.