If you are purchasing a custom-built New Construction home, a construction loan might be right for you. Most construction loans will offer short-term funds that can help you through the building part of your project (six-12 months). After completion of the home, these loans convert to a long-term — 15 or 30-year-loan.
Construction loans are highly specialized and aren’t as readily available as standard mortgages. You can try to obtain these loans from community banks and savings banks. Usually, you will get an installment schedule for your drawdowns of funds. A standard schedule might provide for an initial draw of 15% of the full loan amount for the site preparation and foundation stage. A second draw of another 15% to 20% for framing and then additional draws over the last months for: electrical, plumbing, carpentry, appliance installation and more. Your bank will send an inspector to inspect the status before each draw is paid to report on the progress and make sure it meets local building codes and regulations.