Competing for the same resale homes is exhausting—multiple offers, waived inspections, and compromises you don’t actually want. There’s another path: build your own home, customize a fixer, or find land and create something unique. That’s what construction and renovation loans are designed for.

What These Loans Let You Do

• Build new on land you own or are buying.
• Buy + renovate—roll improvements into one mortgage.
• Transform a fixer (additions, kitchens, systems, structural).
• Step outside the bidding-war rat race and make a home fit you.

Major Program Types (Plain English)

FHA 203(k)

• Works for renovations and ground‑up construction.
• More credit/DTI flexibility than conventional.
• Includes mortgage insurance for the life of the loan when down payment < 10% (and often beyond).
• Best for: Buyers who want accessible credit standards and the ability to finance big improvements or a new build.

Conventional Construction

• Covers renovation and new construction (e.g., HomeStyle/CHOICEReno under the “conventional” umbrella).
• Typically expects higher credit scores and stronger debt ratios than FHA.
• Mortgage insurance applies when < 20% down—but it’s usually temporary and can be removed when equity is sufficient.
• Best for: Well‑qualified borrowers aiming for strong long‑term performance and PMI that can drop off.

VA One‑Time Close (OTC) & VA Renovation

• Available to eligible Veterans, Active‑Duty, and Surviving Spouses.
• Supports both new construction and renovations.
• During construction, payments are often rolled into the loan (program/lender specific).
• Best for: Eligible VA buyers who want flexibility with powerful benefits and no monthly MI.

USDA Single‑Close Construction

• Designed for eligible rural areas with income limits.
• Often allows 0% down and includes a modest guarantee fee + low annual fee.
• Best for: Buyers building in USDA‑approved zones who want an affordable path to new construction.

Note: Builder participation is required in all programs. Your builder can be approved by the lender at any point—loop them in early so everyone is aligned on draw schedules and requirements.

How the Construction Loan Process Works (Step by Step)

1. Get Pre-Qualified — Learn which programs (FHA, VA, USDA, Conventional) fit your credit, income, and goals.
   🔑 Your pre-approval also helps determine your total project budget, including both the construction costs and the land or home purchase price. This keeps your builder conversations and property search realistic from the start.
2. Talk with a Builder Early — Get rough cost estimates for the size/style you want in your target area.
   🔑 Tip: Your builder can be approved with the lender at any stage. Early conversations help ensure they understand draw schedules and inspection milestones.
3. Pick Land or a Property — Purchase land for a new build, or choose a home to renovate.
4. Finalize Plans & Budget — Work with your builder and lender to lock plans, specs, and a realistic budget (include a contingency).
5. Appraisal & Loan Approval — The lender orders an as-completed appraisal based on your final plans and specs to confirm the future value. With underwriting cleared, you’re ready to close.
6. Loan Closing — You close once. At closing, funds for both the purchase (land or property) and the construction budget are set aside in an escrow account. The lender will manage releases during the build.
7. Construction Phase — Money is released in draws as milestones are met (foundation, framing, MEP rough-ins, finishes, final). Inspections verify progress before each draw.
8. Move-In — When construction is complete, the loan converts to your permanent mortgage. Unpack, exhale, enjoy.

Why Choose Build/Reno Instead of Resale?

• Customization: Get the layout, finishes, and efficiency you actually want.
• Less crowded lane: Step out of bidding wars and timelines that don’t fit you.
• Finance the vision: Roll land, improvements, and even major systems into one managed plan.

Ready to See Your Path?