Ground Up Construction Loan

What is a ground-up construction loan?

It’s financing for a new build. The loan covers the cost of construction, and in some cases the land as well, and is paid out as the work progresses. Once the home is finished, you either pay off the construction loan or convert it into a regular mortgage, depending on the program.

How do construction loan draws work?

1. Plans and budget. You and your builder submit house plans, a detailed budget and a construction timeline.
2. Approval and closing. Your lender reviews your finances, the builder, the plans and the projected value of the finished home.
3. Draws during construction. As each stage is completed (foundation, framing, mechanicals, finishes), an inspection confirms the work and the next draw is released to the builder.
4. Completion. When the home receives its certificate of occupancy, the loan is paid off or converts to a permanent mortgage. 

What do you need to qualify for a construction loan?

• Building plans and a detailed budget approved by your builder
• A licensed, insured builder the lender approves
• Land you own or are purchasing, with permits in place or in progress
• Credit and income that meet program guidelines
• Down payment or land equity toward the project 
• An appraisal based on the value of the completed home

What should you know about building on Cape Cod and the South Shore?

Building here comes with local requirements that can affect timing and budget. Check these with your builder early:

• Septic and Title 5: many lots aren’t on town sewer, so a septic design and approval may be needed
• Conservation and wetlands: lots near water, marsh or wetlands may need Conservation Commission approval
• Flood zones and coastal rules: may affect design, elevation and insurance costs
• Zoning and permits: setbacks, lot size and permitting timelines vary by town

Team Steenstra can’t advise on permits, but knowing what’s coming lets us plan your financing around a realistic timeline.

Why work with Team Steenstra on a construction loan?

Construction financing has more moving parts than a regular purchase. You get a local team who knows the Cape and South Shore markets, ranked in the top 1% of loan officers nationally, working with the national resources of New American Funding.

Ground-Up Construction Loan FAQs

Can I buy the land and build with one loan?

Some programs allow land purchase and construction costs to be financed together. Availability depends on the program and your situation, so talk with our team about your plan.

What is a construction-to-permanent loan?

A construction-to-permanent loan (sometimes called a one-time close loan) covers the build and then converts into a regular mortgage when the home is finished, so you go through closing once.

How long does construction financing last?

The construction period depends on the size and complexity of the build and the local permits involved. Your budget and timeline are set at the start of the loan.

Can I act as my own general contractor?

Most lenders require an experienced, licensed builder. Owner-builder loans are limited. Ask our team what’s possible for your project.

Do you finance new construction outside Cape Cod?

Yes. Team Steenstra serves Barnstable, Plymouth, Norfolk and Bristol counties and the Greater Boston area. See all areas we serve.