Your Vision. A plan to build on.
From the first plans to the finished home, understand how construction financing could fit your new build—and what to prepare along the way.
One home. Two financing stages.
A construction loan funds the work of building a home. A permanent mortgage finances the completed property over a longer term. Plan for both before you break ground.
Construction-to-permanent
A structure that connects construction funding with a permanent mortgage, subject to the program’s completion and conversion conditions.
How It May Work
Funds are released during the build. After completion and required reviews, the loan may move into permanent financing under agreed terms.
WHAT TO DISCUSS
Whether the program uses one or more closings, how the rate is set, and what documents or requalification are needed at conversion.
Keep in mind
Conversion is not automatic. Completion deadlines, final inspections and lender conditions must be satisfied.
Construction Only
Short-term financing for the build, with a separate plan to repay the construction balance when the project is complete.
How It May Work
Construction funds are advanced in stages. A separate permanent mortgage may be used to pay off the construction loan at completion.
What to Discuss
The payoff deadline, a separate mortgage application and closing, and how changes in rates or your finances could affect the next loan.
Keep in mind
Permanent financing requires its own approval. Plan for additional closing costs and the risk of different terms later.
These are financing structures to discuss with an advisor, not confirmed company offerings. Availability, eligibility, builder approval, payment structure and conversion terms depend on the lender and program. All loans require review and approval.
A draw isn’t a lump sum. It’s a checkpoint.
Construction funds are typically released in stages as work is completed. The draw schedule connects your budget, the builder’s milestones and the lender’s inspection requirements.
Request a draw
The builder submits progress details, invoices and any required supporting documents.
Verify the work
A lender-required inspection checks progress against the plans and draw request.
Review and release
The lender reviews the inspection and documents before releasing an approved advance.
Agree on the details before work starts
Ask who requests draws, how inspections are scheduled, what fees apply and whether lien waivers or other records are needed. Keep the builder informed of funding dependencies.
Know what an inspection does—and doesn’t do
A lender’s progress inspection is for funding review. It does not replace local building-code inspections, your own quality checks or an independent home inspection.
Milestones, documentation and release timing vary by lender and project. A submitted draw request does not guarantee immediate funding.
Know what’s next. Before you build.
The steps and timing depend on your lender, program and project. Start the financing conversation before making major commitments.
01
Talk through your project and financing
Share where you plan to build, your timeline and your comfortable budget. Discuss construction funding and the permanent mortgage together.
02
Prepare plans, budget and builder details
Gather your construction contract, specifications, cost breakdown and proposed schedule. The lender reviews the builder and project—not just your finances.
03
Complete the loan and property review
Credit, income, assets, land, title and an appraisal based on the proposed completed home may be reviewed. Resolve conditions before closing and starting funded work..
04
Close and build with staged funding
Confirm the draw schedule, inspection process and payment terms. As work progresses, approved draws release funds under the lender’s requirements.
05
Finish the home and arrange permanent financing
Complete final inspections and any required occupancy documentation. Meet conversion conditions or close a separate permanent mortgage to repay the construction loan.
Bring the plans. We’ll help connect the dots.
You don’t need every document to start a conversation. These items can help an advisor understand your project and explain what a lender may request.
Keep your next step on track.
Confirm lender requirements before signing major commitments or starting construction. Changes to plans, the builder or your finances may need a new review.
Already applying? Use the Customer Portal for requested documents. Avoid sending sensitive financial information by regular email.
- Your financial picture
Identification, income and employment records, asset statements and current debts. Your advisor will tailor the document list to your situation.
- Land and property details
Lot address, purchase contract or deed, any land loan balance, survey and available site information. Ask how existing land equity may be considered.
- Plans and specifications
Proposed floor plans, materials, finishes and site work. Include available permits and utility, access or septic details relevant to the property.
- Builder and construction agreement
Builder contact details, qualifications and insurance, plus a signed contract when required. Builder review and approval depend on the lender.
- Budget, schedule and reserves
An itemized cost breakdown, estimated milestones and a contingency plan. Identify which expenses you expect to pay outside the loan.
Make room for the costs—and the unexpected.
A workable project budget accounts for more than the builder’s contract. Review cash needs during construction and the full housing payment after completion.
Include the entire project
Discuss land costs or existing liens, site preparation, utilities, permits, design work, construction, closing costs, inspections and insurance. Confirm which items may be financed.
Plan for overlapping expenses
Allow for your current rent or mortgage, construction-loan payments and living costs while you build. Interest-only payments may be available in some programs, but are not universal.
Understand rate and timing risk
Ask when each rate is set, whether a lock is available, and what delays or extensions could cost. Permanent-loan terms may differ from your early estimates.
Your contingency is a plan, not an afterthought.
Discuss a project-specific reserve for material changes, site surprises and delays. Ask how the lender treats cost overruns, change orders and unused contingency funds.
Do not assume the loan amount can increase if costs rise. Confirm who pays for overruns and what approval is needed before authorizing changes.
Good questions. Clearer decisions.
Every build is different. Let’s talk through what these answers mean for your project in North Carolina or South Carolina.
How is a construction loan different from a regular mortgage?
A construction loan funds the building period, generally through staged draws tied to progress and lender review. A permanent mortgage finances the completed home over a longer repayment term. They may be connected within one program or arranged as separate loans.
Will I have one closing or two?
That depends on the financing structure and lender. Some construction-to-permanent programs may use a single closing; others involve additional steps or closings. Construction-only financing generally requires a separate payoff plan. Ask about closing costs, conversion conditions and any later approval requirements.
What will my payments be while the home is being built?
Payment structure depends on the program, amount drawn and loan terms. Some programs may offer interest-only payments during construction; others work differently. Ask how interest is calculated, when payments begin and how the payment changes with permanent financing.
Can land I already own be part of the financing plan?
Existing land equity may be considered by some lenders, depending on its value, liens and program guidelines. Bring the deed, any land loan information and project details. Do not assume land equity replaces all cash requirements or that a land-only loan is available.
How much cash will I need, and does my builder need approval?
Cash requirements vary with the lender, program, credit profile, land and project. Builder approval is also program-specific and may involve experience, licensing, insurance and contract review. Ask your advisor about both before committing; no down payment or builder approval is guaranteed.
What happens if the build is delayed or goes over budget?
Contact your advisor and lender early. Extensions, revised budgets or change orders may require approval and additional costs or cash. An increase in the loan amount is not guaranteed. Delays can also affect rate locks, completion deadlines and permanent financing.
What needs to happen before permanent financing begins?
The lender may require final inspections, completion of the approved plans, occupancy documentation and updated financial information. Construction-to-permanent conversion depends on the agreed terms; a separate mortgage has its own underwriting and closing requirements. Neither is automatic.
Let’s put a plan behind the home you envision.
Begin your application, or call 910.444.3868 to talk through your build and financing questions with our team first.
