Question 1

What is a construction mortgage?

Accepted Answer

A construction mortgage is a type of financing that helps you build your home from the ground up. Instead of receiving all the funds at once, the money is released in stages called draws as construction progresses.

Question 2

How does a construction mortgage work?

Accepted Answer

Funds are advanced at key milestones during construction (e.g., foundation, framing, lock-up, completion). After each stage, an appraiser confirms the work before the next draw is released. You only pay interest on the funds advanced.

Question 3

What’s the difference between a construction mortgage and a traditional mortgage?

Accepted Answer

A traditional mortgage finances a completed home, while a construction mortgage finances the building process. Once construction is done, the loan typically converts into a regular mortgage.

Question 4

Do I need to own the land first?

Accepted Answer

Not always. Some lenders allow financing for both the land and the build, while others require you to already own the land before construction begins. Haus can help you explore both options.

Question 5

How are payments made during construction?

Accepted Answer

During construction, most lenders require interest-only payments on the amount drawn so far. Once the home is complete, the mortgage converts to a standard loan with principal and interest payments.

Frequently asked questions

What is a construction mortgage?

How does a construction mortgage work?

What’s the difference between a construction mortgage and a traditional mortgage?

Do I need to own the land first?

How are payments made during construction?