A construction-to-permanent loan funds your build in draws as the work gets done, then converts into your permanent mortgage at completion — one application, one closing, one set of closing costs. The alternative is closing twice and paying for it twice. I also finance builder spec homes and inventory purchases across the Capital Region.
The traditional path is a short-term construction loan from a local bank, then a whole second mortgage application when the house is finished. Construction-to-permanent collapses that into one transaction.
One application, one appraisal, one title policy, one set of costs. You do not requalify at the end.
Conventional, FHA, VA and USDA all have construction paths. Down payment depends on which one fits.
Typical construction window, with extensions available. Interest-only on the drawn balance while you build.
When the certificate of occupancy issues, the loan rolls into your permanent mortgage automatically.
Which one is right depends on whether you already own the land, who your builder is, and how much of your own cash you want tied up during the build.
| Construction-to-permanent | Bank construction loan + refi | Builder’s own financing | |
|---|---|---|---|
| Closings | One | Two | One, at completion |
| Closing costs | Paid once | Paid twice | Paid once — but priced into the house |
| Requalify at completion | No | Yes — rates and your income can change | Depends on lender |
| Rate risk during build | Locked or extended-lock options | Fully exposed until the refi | Builder’s lender sets terms |
| Land already owned | Counts as equity toward your down payment | Same | Usually builder-owned lot |
| Builder choice | Your licensed builder, approved by the lender | Your builder | The builder only |
| Best when | You are building custom on your lot or a builder’s lot | You have a banking relationship and want a short bridge | You want the incentive package and the terms are genuinely competitive |
Builder incentives are real money — but always price the builder’s lender against an outside quote. Bring me the builder’s loan estimate and I will tell you straight whether to take it.
Capital Region inventory has been thin for years. Building has stopped being the exotic option and started being the practical one — particularly in Saratoga, Clifton Park, and the Greenbush side of the river.
Already own the land? Its value counts as equity toward your down payment, sometimes covering it entirely.
Started with a land loan and now ready to build. We roll it into construction financing.
A finished or near-finished builder home is a standard purchase — conventional, FHA, VA or USDA, whichever fits.
Buying an outdated house to replace it. Also look at renovation loans if the shell is worth keeping.
Eligible veterans can build with zero down on select construction programs. Not every lender writes it.
Much of upstate qualifies for USDA, and it has a construction path with zero down.
You are not writing checks to the builder out of pocket. The lender pays for completed work in stages, and an inspector confirms each stage before money moves.
You qualify as usual, and your builder submits license, insurance, references, and the full cost breakdown. Builder approval is the step people forget.
The appraisal is based on plans and specs — what the home will be worth when it is done, not the empty lot.
At closing the land is paid for and the construction account is set. The builder requests draws; an inspector verifies the work; funds release.
Certificate of occupancy, final inspection, final appraisal — then the loan becomes your permanent mortgage. No second closing.
Typical guardrails. Construction programs vary more by investor than almost any other product, so treat these as the shape of the thing rather than a rate sheet.
| Guideline | Typical |
|---|---|
| Minimum down | 5% conventional · 3.5% FHA · 0% VA and USDA on eligible programs |
| Land equity | Owned land counts toward the down payment at appraised value |
| Minimum FICO | 680 typical conventional · lower on government programs |
| Max DTI | 45% typical · to 50% with reserves |
| Build window | 12 months typical · extensions available |
| Payments during build | Interest-only on the drawn balance — you pay on what has been spent, not the full loan |
| Draw schedule | Typically 4–6 draws tied to completion milestones, each inspected |
| Builder requirements | Licensed, insured, financially reviewed · no owner-builder on most programs |
| Contingency reserve | Usually 5–10% of the build budget held for overruns |
| Property types | Primary residence · second home on select programs · 1 unit |
| Conversion | Automatic at certificate of occupancy — no requalification, no second closing |
| Above the limit | Jumbo construction financing available for higher-cost builds |
It is a single loan that funds your build in draws and then converts into your permanent mortgage when the house is finished. One application, one closing, one set of closing costs — instead of a short-term construction loan followed by an entirely separate refinance.
Yes, but only interest on the money actually drawn so far. Early in the build, when only the foundation has been paid for, that payment is small. It grows as the house does. Budget for carrying that alongside your current rent or mortgage.
Usually, yes — the appraised value of the land counts as equity toward your down payment, and on a lot you have owned for a while it can cover the requirement entirely. This is the single biggest advantage of buying the land first.
You can use your licensed builder, but the lender approves them too — license, insurance, financial standing, references, and a detailed cost breakdown. Start that paperwork early; builder approval is the most common source of delay. Owner-builder arrangements are not permitted on most programs.
All three have construction paths, and VA and USDA versions can be built with zero down for eligible borrowers. Not every lender writes them, which is exactly why it is worth asking me rather than assuming.
Programs hold a contingency reserve, typically 5–10% of the budget, for exactly this. Beyond that, change orders you initiate generally come out of pocket. Lock your specs before closing — mid-build changes are where budgets break.
No. A renovation loan finances buying an existing house plus the work on it. Construction financing builds from the ground up. If you are unsure which your project is, the dividing line is usually whether the existing structure stays.
Licensed across New York State — with deep roots in Albany and the Capital Region.
Don't see your town? Reach out — I lend statewide, NYC included. Or see every Capital Region town.