Straight answers
Construction loan FAQ
▸How is a construction loan different from a regular mortgage?
A mortgage hands over one lump sum for an existing home. A construction loan releases money in stages (draws) as your home gets built, with an inspection before each release, and you pay interest only on what's been drawn. When the home is finished, the loan converts to (or is replaced by) a normal mortgage.
▸What credit score and down payment do I need?
Typical ranges: conventional programs look for roughly 680+ credit and 15–25% down; FHA one-time close programs go down to about 620 credit and 3.5% down; VA and USDA offer $0-down options for eligible borrowers. If you already own your land, its appraised value usually counts toward the down payment — often covering most of it.
▸I own my land — does that really count as my down payment?
Usually, yes. Lenders credit the land's appraised value (or your equity in it) toward the required down payment on a construction-to-permanent loan. Buying the lot first, even years early, is one of the smartest moves a future builder can make.
▸What does the lender need from my builder?
A formal builder-approval packet: state license, insurance certificates, references, and often financial statements. Lenders vet builders because a failed builder is the biggest risk on the project — the vetting protects you too. Builders who've done financed jobs before have this packet ready.
▸Can I be my own general contractor?
Sometimes, but the lender pool shrinks dramatically — most programs require a licensed builder of record. If you have real construction experience it's worth a conversation; if not, hiring a licensed GC typically unlocks far better financing than going owner-builder.
▸How long do I have to build?
Most programs allow up to 12 months of construction. Under current agency guidelines for single-close loans, no individual construction period may exceed 12 months and the total can't exceed 18. Your builder's schedule should fit comfortably inside that window before you close.
▸What do I pay during construction?
Interest only, and only on the amount drawn so far — so payments start small and grow as the build progresses. Some programs let you roll an interest reserve into the loan so there's no payment at all until you move in.
▸What are draws, and who decides when the builder gets paid?
Draws are staged releases of loan funds tied to completed milestones — foundation, framing, mechanicals, finishes. Before each draw, an inspector verifies the work is done. In Michigan, the builder also submits a notarized sworn statement and lien waivers, which the title company verifies before funds release.
▸Do you serve my state?
The guide and wizard cover all 50 states — loan programs are national, and your roadmap reflects your state's process. Lending availability for your specific project is confirmed during your consultation.
▸Does using this site cost anything or obligate me?
No and no. The wizard and roadmap are free, there's no credit pull, and your information goes only to Emil Izrailov (NMLS #132173) to prepare your consultation — never sold to lead brokers.