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Construction Loans

Can’t find the perfect home to purchase so you’re thinking of building a brand new one but scared about the cost? Do you love your current home and thinking of renovating it but need some financial assistance to help make it just the way you envision? If you answered yes to either of these questions, then connect with us as we have New Construction financing to help make your dreams a reality!

What is a Construction Loan?

A Construction Loan is a short-term, higher-interest loan that provides the funds required to build a residential property. The process of borrowing the funds to pay for the project is much different than getting a mortgage to move into an existing property.

Construction Loans typically last around one year. Within that year of using your Construction Loan, the property must be built and a certificate of occupancy must be issued.


What does a Construction Loan cover?

  • Cost of the land
  • Contractor labor (framing, roofing, exterior, interior finish, etc.)
  • Subcontractor costs (drywall, electrical, plumbing, HVAC, etc.)
  • Building materials
  • Permits
  • Landscaping
Some banks will also allow appliances to be financed. Be sure to check with your lender to see if this is an option. Financing costs for furnishings that are removable are not allowed for this type of loan.

What steps should I follow if I want to
apply for a Construction Loan?

1. Commence the Renovation

- Determine your house plans and specifications
- Come up with a budget (optional)
- Find a builder
- Contact NorthPort Funding to speak with a loan officer about your financing options

2. Course of Action

- Complete your construction plans
- Finalize the contract with your builder
- Apply for the loan

3. Complete the Contracts

- Finalize any last minute details you need to receive your loan
- Review and sign your loan documents

Let the construction begin!

4. Caution: Under Construction

The funds are given to your builder as you transition into different stages of construction

5. Construction Complete

You did it! Enjoy your new home!
Your loan will now transition into the permanent phase and become a traditional mortgage
Do you have questions when it comes to construction loans? Are you asking yourself, “when is down payment due for new construction homes?”
Down payment due dates depend on when in the construction process you purchase the property. Typically, if the property is being built from scratch, you will make a down payment during the construction process depending on when you are able to negotiate your financing. IF the property is already built, you will make a down payment when you are closing on the property.
Wondering if new construction apartments can quality for the new construction loan?
Yes they can! They can apply for the loan just like a house and ultimately covering items like new construction painting, new construction plumbing, and much more!
What are Construction-To-Permanent Loans?
Construction-to-permanent loans are a financing option that potential builders can apply for. They are one-time loans that fund construction and then convert into a permanent mortgage. During the construction phase, borrowers make interest-only payments. With a construction-to-permanent loan, you can benefit by being able to lock in your mortgage interest rate before construction begins, protecting you from rising rates. Construction-to-permanent loans cover more than the cost of purchasing a finished home so that results in the down payment typically being higher than regular construction loans. In most cases, lenders ask that about 20% gets put towards a down payment of the property’s projected value. Some cases however, it is required to do a 25-30% down payment. If those down payments can’t be met, lenders could possibly require the buyer to have private mortgage insurance (PMI) to protect their lending investment.

Make your construction project easier with the right financing.
From building new, to renovating, or even tearing down to start fresh.
contact NorthPort Funding and we will help get you into your perfect new home.