Loan TypesHomebuying Glossary
Construction Loan
Short-term financing to pay for building a new home, disbursed in stages as work is completed.
In plain English
Construction loans fund new-home building or major rehabs, paying the contractor in draws tied to project milestones rather than a single lump sum. Many convert automatically into a standard mortgage once construction finishes.
Why it matters
If you're building rather than buying an existing home, your financing timeline and inspection process look quite different from a typical purchase.
Where you'll run into it
Guides and tools on TheBuyingPath that cover construction loan in context.
Related terms
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