Construction loans
Finance a new home from ground-break to move-in.
A construction loan finances the actual building of a home. A construction-to-permanent loan combines the construction financing and the end mortgage into one closing — you close once, the loan funds the build in stages, and it automatically converts to a standard 30-year mortgage when the home is complete.
What is a construction loan?
A construction loan is a short-term loan used to finance the actual construction of a new home. Rather than delivering a single lump sum, the lender funds "draws" as the builder completes stages of the project (foundation, framing, roof, drywall, finish, etc.).
There are two main structures: (1) Construction-only loan — one loan for the build, then a separate refinance into a permanent mortgage when done. (2) Construction-to-permanent — a single loan that funds the build and automatically converts to a 30-year mortgage at completion. Most Belong Lending borrowers choose construction-to-permanent because it means one closing and one set of closing costs.
How draws work
The lender releases funds to the builder (or borrower, on some programs) at defined milestones. Each draw request is typically inspected by the lender or a third-party inspector before funds are released. This structure protects the lender and ensures the money is used for the actual work being done.
During construction, most loans require interest-only payments on the disbursed balance. Once the home is complete and the loan converts to permanent, standard principal-and-interest payments begin.
Down payment and lot
Construction loans typically require 15% – 25% down of the total project cost (land + construction). If you already own the lot free-and-clear, its appraised value can count toward the down payment.
The builder must usually be licensed, insured, and lender-approved. Some programs allow owner-builders with strict qualifications; most do not.
Key benefits
- One closing (construction-to-permanent) — no separate refinance at completion
- Funds released in stages as the builder completes work
- Interest-only payments during the construction phase
- Lot value can count toward the down payment if owned free-and-clear
- Fixed-rate options available for the permanent phase
Who this loan fits best
- Buyers building a custom home from the ground up
- Homeowners tearing down and rebuilding on an existing lot
- Buyers who own land and want to finance the build only
- Anyone who prefers one closing instead of two
Estimate your monthly payment
Construction payment calculator
Estimate only. Actual rate, taxes, insurance, and mortgage insurance depend on your specific loan and property. Belong Lending confirms your exact payment at pre-approval.
Serving Detroit and surrounding Michigan communities
Belong Lending helps borrowers with Construction loans across Detroit, Troy, Southfield, Ann Arbor, Flint, Livonia, Warren, Sterling Heights, Farmington Hills, Novi, Rochester Hills, Dearborn, and beyond — plus additional coverage throughout Wayne County, Oakland County, Macomb County, Washtenaw County, Livingston County, Genesee County. We also lend on eligible properties in Ohio, Florida, Georgia, and Texas.
Frequently asked questions
What is the difference between construction-only and construction-to-permanent?
Construction-only loans finance just the build and require a separate refinance into a permanent mortgage when the home is complete. Construction-to-permanent (C2P) loans combine both into one closing — you close once, the loan funds the build, and it automatically converts to a standard 30-year mortgage at completion. C2P saves one set of closing costs.
How much down payment do I need?
Most construction loans require 15% – 25% down of the total project cost. If you already own the land, its appraised value can count toward the down payment. Larger down payments generally unlock better pricing.
Can I be my own builder?
Most construction loans require a licensed, insured, lender-approved general contractor. A few "owner-builder" programs exist for borrowers with construction background, but they are less common and have stricter requirements.
What happens if the construction takes longer than expected?
Most construction loans allow for reasonable extension of the construction period, though some carry an extension fee. Belong Lending walks you through timeline expectations up front and helps manage extensions if needed.
Do I make full mortgage payments during construction?
No — during the construction phase, most loans require interest-only payments on the disbursed balance (not the full loan amount). Once the home is complete and the loan converts to permanent, standard principal-and-interest payments begin.