Construction and renovation
A construction or renovation loan pays for building or improving a home in stages as the work is done. A construction loan funds a new build; a renovation loan folds repair costs into a purchase or refinance.
Buyers building a new home, and owners buying or keeping a home that needs significant work.
What a lender will ask for
- Plans, a detailed budget and a signed contract with a qualified, insured builder or contractor the lender approves.
- An appraisal based on what the home will be worth once the work is finished.
- Income a lender can verify, and a credit history the lender reviews.
- A down payment, and funds set aside for costs that run over budget.
What it offers
- One loan can cover the land or the home and the work together, instead of separate finance for each.
- A construction-to-permanent loan closes once and becomes an ordinary mortgage when the build is complete.
- Renovation versions exist within FHA and conventional programs, so repairs can be financed with the home itself.
What to weigh up
- Money is released in stages after inspections, so the builder's schedule and the lender's have to line up.
- Costs and timelines often run over. Lenders want a contingency, and delays can cost you.
- Rates and fees are usually higher while the home is being built.
- The builder or contractor has to be approved by the lender, which can rule some out.
Related loan programs
- PurchaseFirst-time buyers, move-up buyers, and anyone buying a primary home in Texas or Florida.
- Home equity loans and HELOCsHomeowners who want to borrow against their equity and keep their current first mortgage.
- Commercial loansBusiness owners and investors buying, refinancing or building commercial property, including apartment buildings of five or more units.
Start with a pre‑qualification request
Tell us what you want to do and where, and we come back with options compared across multiple wholesale lenders. A pre-qualification request starts it, and nothing is a commitment until a lender has reviewed your file.