The short answer
A construction loan finances building a home. Funds are typically released in stages as work progresses. Some programs combine construction and permanent financing in one closing; others require separate loans.
Mortgage guidance with Jennifer Reich · NMLS 162239
Building a home involves more than qualifying for a mortgage. The lender also reviews the builder, plans, budget, land, and expected completed value. Discuss financing before committing to a construction contract.
Fairway describes single-close construction options, but the structure available for your project depends on underwriting and program requirements.
How do construction draws work?
Unlike a purchase loan funded at closing, construction funds are generally disbursed as approved work is completed. Inspections, draw requests, and budget tracking help determine when funds are released.
Ask how interest is calculated during construction, what happens if the project runs late, and how the permanent loan's rate and payment are established.
Who may want to explore it
- Borrowers building a primary residence
- Landowners comparing financing for a new build
Documentation & eligibility
- Builder contract, plans, specifications, and detailed budget
- Land ownership or purchase details
- Income, assets, credit, and reserve documentation
Benefits
- Financing can align with construction milestones
- A single-close structure may combine two financing phases
Tradeoffs
- Builder, plans, and project approval are required
- Delays and cost overruns can require additional cash
Questions to ask Jennifer
- Is a single-close option available for my project?
- How are draws, overruns, and rate changes handled?
Construction Loans: common questions
Does a construction loan automatically cover the land?
Land financing or existing land equity may be part of the structure, depending on the program. Jennifer will review the lot and project together; do not assume a land purchase is included.
Is every construction loan a single-close loan?
No. Construction-to-permanent and separate-closing arrangements have different requirements and costs. Confirm the available structure before signing a building contract.
Utah mortgage guidance
A local conversation. A property-specific plan.
For a build in Davis or Washington County, discuss the actual lot, builder, permitting timeline, and project budget before choosing financing. Location alone does not establish project eligibility.
Office: 69 East 200 North, Suite A, Kaysville, UT 84037. Programs and terms are subject to underwriting and may change.