Four Things to Know About Construction Loans

Housing inventory has hit a record low, according to Redfin. And while there may be fewer existing houses on the market, that doesn’t mean your dream home isn’t attainable. A Construction Loan (specifically from BHFCU!) can make your perfect home a reality.


#1 – Your Construction Loan is as unique as your building situation.
Construction Loans are not one size fits all. These loans can span from purchasing land and building a new house to large renovation projects on an existing structure and everything in between. Whatever your situation, you can get pre-qualified for a Construction Loan tailored specifically to you.


#2 – BHFCU Construction Loans are single close.
Unique to BHFCU’s Construction Loans, you only pay one set of closing costs at the beginning of your project. During the construction phase, also known as the interest-only phase, you don’t make payments on principal. This phase typically lasts for 9 -12 months, after which we convert your Construction Loan to a conventional Mortgage.


#3 – Needing 20% down is a myth.
Surprise! You can fund your Construction Loan with as little as 0% down. You’ll just need to pay closing costs and 10% contingency reserves upfront. Your contingency reserves are held just in case you’d like changes to the original plans (hello, hardwoods!), or material costs come in a bit higher. Any unused contingency reserve will be returned to you or can be applied to your Mortgage when the construction phase is completed.


#4 – Construction Loans aren’t just for new builds.
Are you looking at making major renovations? A Renovation Construction Loan can help! In this case, a lender will work with you to refinance your existing Mortgage, providing you with cash to pay for your project. These loans are more similar to a traditional Mortgage, with regular payments beginning immediately after closing.


In the world of Construction Loans, that’s just the tip of the iceberg. Visit for more information and tools like our Mortgage Calculator, plus find a lender to help get you started!