Vacant Land:
Select lenders will finance the acquisition of unimproved residentially zoned land. These loans often have a short term and may specify a certain time frame by which construction must begin.
Construction Loans:
Acquisition/construction loans allow you to finance both the purchase of unimproved (residentially zoned) land and the construction of a new home. If you haven’t yet purchased the land, its cost can be included in the total loan amount. If you already own the land, a straight construction loan can be used solely to fund the construction of the residence. The application process is similar to a traditional mortgage—you'll need to demonstrate sufficient income and assets to show your ability to repay. In addition, you’ll need to provide construction-related documentation, including completed blueprints, drawings, and building plans. Some lenders may also require approval of your builder. An appraisal will be conducted based on the planned construction to ensure the finished home will have sufficient value to justify the loan amount. A one-close construction loan allows you to lock in your permanent interest rate upfront. During construction, you’ll make interest-only payments based on the funds drawn as the project progresses. These funds cover construction costs, including materials and labor. Lenders typically disburse these funds in phases, following successful inspections at key milestones.
Once construction is complete and a certificate of occupancy is
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