Building a financiamento de construção em terreno proprio on your own land can be a great investment opportunity. The key is ensuring that you have the financing to complete the project within the specified timeline. Choosing the right loan is an important first step, and it will depend on your location, budget, credit score and down payment requirements. There are several options available, including personal loans and construction financing on your own land. The article below explores these different types of financing and provides tips for choosing the best option to help you build your dream home.

What is a Construction Loan?

A construction loan is a specialty financing product that allows you to borrow money for the cost of constructing a new home on your own land. It is typically short-term and works differently than traditional mortgage loans. During the construction phase, the lender will disburse funds in stages, called draws, based on progress and inspections. The process ensures that your contractor is on track with the plans and schedules for the project. After the construction period is complete, you will convert the loan into a traditional mortgage to purchase your finished home.

Some lenders offer a combined construction-to-permanent loan, which is one loan that covers both the lot purchase and construction costs. This can help simplify the process and reduce the time it takes to close on your new home. The loan will require you to pay a higher interest rate during the construction phase, but many people find that it is worth the extra expense to avoid multiple closing dates and paperwork.