Construction loans: budget, draw schedule, and permanent financing

One closing or two?

Ask whether the program combines construction and permanent financing or requires a separate mortgage after completion. Review future qualification, rate changes, closing costs, and what happens if permanent financing is delayed. The structure depends on the lender and program.

Builder, land, and project review

Bring the land details, builder contract, plans, budget, and expected completion date. Ask about builder approval, permits, insurance, appraisal, contingency funds, and whether existing land equity can contribute to the transaction.

Payment during construction

Request the draw schedule and a clear explanation of how interest and payments are calculated as funds are released. Ask who approves disbursements and inspections. Plan for delays, cost overruns, and housing expenses while the home is being built.

Prepare for your conversation

Write down your comfortable monthly payment, available savings, property plans, and timing. Ask which documents are needed for your income type and use the secure application portal for financial records. For a home purchase, leave room in the budget for maintenance and expenses beyond the mortgage.

Questions worth asking

• What could change my eligibility or costs before closing?
• What cash will I need at closing, and what should remain afterward?
• Which alternative would you compare with this loan, and why?