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As of June 25, 2018, we’ve made some changes to the way our mortgage approvals work. You can read more about our Power Buyer ProcessTM.

Many people prefer to custom-design their own home, perhaps because it’s too difficult to find a home that meets all their needs or because they want a brand-new home. A construction loan is a loan that finances the building of that new home.

At Quicken Loans, we do not provide construction loans. We can provide the financing for the home once it’s built and we can refinance your construction loan into a standard mortgage once your home is completed. For more information on Quicken Loans and construction loans, visit the glossary page here

Construction loans are different from your standardized mortgages usually underwritten by Fannie Mae and Freddie Mac. They are different because the lender has to know the “story” behind the planned construction before it will be willing to lend money to the borrower.

They also don’t pay out all at once. Borrowers usually get between five and 10 draws which coincide with certain stages of construction such as:

  • Pouring the foundation
  • Framing
  • Installing heating and cooling systems, wiring, and plumbing systems
  • Installing cabinets, flooring and fixtures
  • Finishing work (painting, carpeting, etc


Construction loans are usually short-term and are converted or replaced by a standard mortgage once construction is finished. Some people get a “construction-only” loan in which only the building of the home is financed. They then have the choice to shop around for another lender and/or a lower rate once the home is occupied.


Others prefer to simply get a “construction-to-permanent” loan in which their construction loan is converted into a standard loan by the same lender, once the borrower has a certificate of occupancy. This saves time and money since the borrower only has to fill out one mortgage application and close once. The type of mortgage the construction loan is converted to is decided on at close.

Rate Lock

Some lenders allow you to lock in your mortgage rate for up to 12 months during construction. This is an advantage because you avoid the risk of rising rates. However, some lenders offer a float-down option which allows the borrower to take advantage of rate dips.

How Much Can You Afford?

To find out how much you can afford to borrow, you must figure out first what it will cost to build. Think about how much it costs to design and build the home; how the build site affects cost (i.e.: if the site is on a steep hill, it may be a financial nightmare to install the septic system); and other such issues.

Once you’ve estimated the cost of construction, it’s a good idea to find out how much you qualify to borrow. Most lenders will offer you a pre-qualification which will give you an idea of how much you can borrow. However, this is not a guarantee since the lender hasn’t verified any of your information or committed to the loan amount.

It may be better to get an actual approval. You’ll know exactly how much you can spend and whether you can afford to build the home as planned or not.

If you’re planning on building a custom home, find out how much you can afford and whether your plans fit within that budget. Also, consider whether you want to shop around for another mortgage once construction is complete or whether you’d rather save yourself the trouble by converting your construction loan into a standard mortgage.


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This Post Has 14 Comments

  1. Then why does your website show construction loans?
    It is a choice that comes up when I put in “Quicken Construction Loans”?
    I recommended you and the person I recommended you too thinks I am full of crap, now.

    1. Hey Alex, we apologize for any confusion you may have about this. I’m going to go through and update this post so it’s more clear. As far as Google goes, we have a few pages that define what a construction loan is, so we pop up when you search “Quicken Construction Loans.” Quicken Loans® doesn’t offer construction loans, but we do in most cases, convert them to standard mortgages once the house is built. We also offer refinancing of construction loans. For more info on these types of loans, check out the construction loans glossary page by clicking here.

      Thanks for reading!

    1. Hi Robyn, unfortunately, Quicken Loans® does not offer construction loans at this time. Thanks for contacting us and good luck in your search. Once your home is completed and you have a certificate of occupancy, we would be able to refinance you out of your construction loan and into a conventional mortgage.

  2. My husband and I are looking to build in Western NY and need to find someone who either does a construction loan that includes land, uses purchased land as collateral, and does a construction to permanent loan. Any suggestions would be greatly appreciated. We have the lot, the plans and possibly the builder picked out…

    1. Hi Dani,

      Thanks for reaching out to Quicken Loans®. While we don’t do construction loans, we would be happy to help you into a conventional mortgage when it’s time to refinance out of the construction loan. We will have one of our home loan experts contact you to give you some more information. Thanks.

  3. Hi,

    Are there lenders out there that do construction loans that include the purchase of the lot? I have found a desirable lot and also working the same builder that built in the same community the lot is it. Are there options out there for me?


    1. Hi Gori

      Quicken Loans® doesn’t do construction loans, but it’s not hard to find someone who does.

      A lot of builders have preferred lenders for specific communities. I would look at that as an option along with a local community bank that deals with construction financing. Good luck and let us know if you have any other questions.

    1. Hi Tom,

      Unfortunately we do not provide construction loans. Good luck with your search and if you have any additional questions, please contact us! Thanks for reading!

  4. Hello, following up on the last question, you don’t do construction loans but you refinance construction loans. If I’m interested in a “rate lock” as the article above describes, can I do that with you if I get a construction loan with someone else, or can this only be done with the construction loan lender?

    I’m guessing this is only done with the construction loan lender.


    1. Hi Bill,
      Yes, we can do the “refi” of the construction loan. We have rate locks of up to 90 days available, but there is additional cost for that rate lock period. You can lock your rate as soon as you are within the 90 day period of closing on a refinance of the construction loan. Additionally, you would be eligible for two 15 day rate lock extensions that would cost a ¼ point each. Please let me know if you would like us to have a banker contact you to proceed. Thanks!

    1. Hi Mendy,
      Unfortunately we do not do construction loans. However, once the house is built, we do refinance construction loans. Please let me know if you have any other questions.

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