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Buying Vs Building


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Construction loans are a whole different animal compared to other home loans...your construction loan will be based on the value of the property upon completion. Also, you will have to maintain an interest reserve on the loan as well - generally the lender holds that amount back.

The loan money is released in stages depending on the completion of the building - usually after an inspection. Final disbursement happens after a certificate of occupancy is issued.

As far as USDA loans, I am not aware of construction loan programs. FHA has the 203k loan, howerver that is a remodel loan- not a construction loan.

Lastly, construction loans are for construction only- you have to already own the land.

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