Construction loan
A construction loan is a short-term loan that pays for building a home, with funds released in stages as work progresses.
A construction loan pays for the build itself. It differs from a regular mortgage, which buys a finished house. The lender releases money in steps as the work moves forward.
The Consumer Financial Protection Bureau says construction loans have higher interest rates than longer-term mortgages. It also says payments sometimes start six to 24 months after the loan is made. Those steps follow a draw schedule. Some loans can turn into a mortgage, as a construction-to-permanent loan does. See the cost to build a custom home in Tampa for how financing fits the budget.
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