10 Tips for Navigating the Construction Loan Process
- Start with a Solid Pre-Qualification
Before you design or build, know your budget. A pre-qualification helps you set clear expectations and gives your builder a reliable foundation to work from. - Choose a Builder You Trust
Your lender and builder will work closely together. Choosing an experienced builder — like Manuel Builders — ensures smoother communication and fewer surprises. - Understand How a Construction Loan Works
Unlike a traditional mortgage, construction loans fund your build in phases, known as “draws,” as work is completed. You’ll only pay interest on what’s been drawn so far. - Keep Your Documents Handy
Be ready to provide updated pay stubs, bank statements, and insurance information throughout the process — it helps prevent delays in draw approvals or closing. - Know Your Down Payment Options
Down payments for construction loans can vary, often between 5–20%. Ask your loan officer about options that fit your financial goals. - Expect Inspections During Construction
After each draw request, inspections confirm progress before funds are released. It protects you, your lender, and your builder. - Monitor Your Budget Closely
Plan a small cushion for unexpected costs. Even the best builds can have change orders or adjustments along the way. - Communicate Often with Your Loan Officer
Stay in touch — your lender can answer questions, explain draw schedules, and help manage timelines to keep your project on track. - Ask About the Conversion Process
Many construction loans can automatically convert into a permanent mortgage once your home is complete — often called a construction-to-permanent loan. - Celebrate the Finish Line
Once your home passes final inspection and the loan converts, it’s time to move in and make it yours. Your dream home — and your hard work — have come together!