Buy a home > I’m building a new home.

Building your dream home from the ground up is wonderfully satisfying, but construction loans are tricky and there are specific risks involved. The wrong decision can cost you considerable money since you are obtaining loan qualification for a property that does not yet exist. If a problem occurs during construction, you may lose your qualification and need to re-qualify. This puts you in jeopardy of higher interest rates. Even more importantly, if for some reason you cannot re-qualify, you may lose your down payment.

The best way to avoid these dangers is to become knowledgeable on different types of construction loans and the various scenarios you might face during the construction phase. Topdot mortgage specialists are committed to putting you at ease and supporting you every step of the way. We streamline the construction loan process, outline your options to be as risk-free as possible and consistently look for ways to save you money.


Common types of construction loans:

Construction-only loans
Construction only loans are short-term loans. They are usually variable rate loans. During the time of the construction, you only pay interest on the amount that was disbursed to date. The entire loan amount will be due at the time of completion.

Construction-to-permanent loans
A construction-to-permanent loan is a mortgage that combines the construction costs with the permanent financing of your new home.

The construction-to-permanent loan process is beneficial because it simplifies the mortgage process. Construction-to-permanent loans involve only one set of loan documents, one closing and allow you to lock in your interest rate before the completion of your new home. Once you close on a construction-to-permanent loan, you’ll have up to twelve months to complete the construction. During the construction period, you will only be charged interest on the funds that were disbursed for the actual building of the property. Your permanent home mortgage begins when the construction is completed.

Bridge loans
A bridge loan allows you to live in your current home while you are building your new one. With a bridge loan, you can use the equity in your current home for the down payment on a construction-to-permanent loan.