Construction Loan

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What is a Construction Loan?

A construction loan is a kind of loan that people use to finance the various costs, such as labor, associated with either the construction or renovation of a property. You have the option to use a construction loan to purchase land, and build on property that you own. You can also renovate existing structures, provided your loan program allows.

The main attraction of a construction loan is that it enables and facilitates home buyers in building a new property. You can use funds you receive from a construction loan to purchase land, pay architects, and contractors, and purchase building materials.

If you’re interested in construction loans, you may be faced with a construction contract and land contract .

Examples of Construction Loans

  • Example 1: Land development loans
  • Example 2: Mini perm loans

Here’s Investopedia’s definition of a construction loan .

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ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.


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