Construction loans are combined with either an FHA or conventional loan (permanent loan). The construction loan terms are in place during the construction period (usually 4-6 months), and then changed to the terms of the FHA or conventional loan once the construction is done, construction lenders will either do a one or a two time close. A onetime close, as the term suggests, requires only one closing, and when the construction is completed, the terms are modified to the permanent loan. A two time close requires closings on both the construction loan and the permanent loan, which can result in higher closing costs due to multiple closings. The proceeds of the construction loan are paid out in draws to the contractor/builder (progress draws) as the project progresses. Lenders will usually require the borrower to pay interest only payment on whatever draws the contractor/builder has taken.
If you own your lot already, you can use the equity in the property for down payment. The permanent loan can be either an FHA or conventional loan. All of our construction loans are one time close loans. We offer construction financing for Manufactured, Modular, or site built homes. The interest rate on your permanent loan is locked at the time you close your construction loan, so you do not have to worry about interest rates increasing while your home is being built.