Construction Loan

A construction loan is a short-term financing option used to fund the building or renovation of a property. Typically, it covers costs like materials, labor, and permits during the construction process. Unlike traditional mortgages, funds are disbursed gradually as construction milestones are reached, rather than in a lump sum. Once construction is complete, the borrower often transitions to a permanent mortgage or pays off the construction loan. These loans usually have higher interest rates and stricter requirements, reflecting the increased risk during the building phase. They are ideal for developers, builders, or individuals constructing a new home.