Construction Loans

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    Are you looking to build the home of your dreams? Or maybe you are looking to purchase a fixer-upper to work on and make your own. GuardHill offers construction loans for new builds or renovations and remodels.


    What is a Construction Loan?

    A loan that will help cover the costs associated with a new construction or renovation project. Construction loans typically have a shorter-term and a higher interest rate than traditional mortgages.


    How does a New Construction Loan Work?

    Typically, you only pay interest on the loan during the construction or renovation period. Once the project is complete, the loan amount is due, and the construction mortgage turns into a traditional mortgage. From that point on, you will make regular monthly mortgage payments composed of principal and interest.


    What are the Different Types of Construction Loans?

    GuardHill offers multiple construction loan programs to assist with your financing goals.

    Construction-to-permanent loans
    A construction loan that converts to a permanent mortgage once the project is complete. This type of financing is considered one loan, so you only complete the application and closing process once. This type of program is excellent for those looking to build a custom home from the ground-up.

    Construction loan for renovation
    Construction loans for renovations or remodels allow you to complete home repairs or renovations to improve your home’s resale value. Some homebuyers may want to do renovations to add their style or touch to the house. Others may be looking to repair damages to improve the longevity of the house. Either way, renovations have become increasingly popular as more and more homeowners are working from home and need to modify or expand their existing space. Some common renovations that are done with a construction loan for renovation include:

      • Kitchen remodel
      • Creating an open floor plan
      • Corrections of deferred maintenance
      • Foundation repairs
      • Room additions
      • Bathroom remodel
      • Plumbing or septic updates
      • Driveway or sidewalk repairs

    203(k) FHA Loan
    A 203(k) FHA loan is a federally backed (FHA) loan that is ideal for purchasing a fixer-upper home. This program rolls all the costs into one loan and will give you the money to buy the home, plus the money to do any necessary renovations or repairs.

    Fannie Mae HomeStyle Renovation Loan
    The Fannie Mae HomeStyle Renovation loan is another type of home improvement renovation program that allows you to combine the home and renovation costs into one loan. This loan program is not federally backed.


    How to qualify for a Construction Loan

    The application and approval process for a construction loan is similar to obtaining a regular purchase or refinance mortgage. The mortgage lender will review all your credit and income documentation to ensure your ability to repay the loan. Although, the lender may require you to meet some stricter guidelines for a construction loan:

    • High credit score
    • Stable income and employment
    • Lower debt-to-income ratio
    • Down payment of at least 20%
    • Building plans for a new construction project
    • Plans for any remodeling projects
    • Basic understanding of the construction timeline

    Why Choose GuardHill for your Construction Loan?

    Whether you are looking to build your dream home or make some significant home improvements, GuardHill is prepared to make your vision become a reality. With our custom-tailored loan programs and over 28 years of mortgage financing experience, our team will ensure that you can responsibly borrow the money you need for your project.