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Construction & Lot Loans

Building the home of your dreams is exciting. Just as a solid foundation is important to any well-constructed house, financing is critical to the construction process as a whole.

A smiling couple and a construction worker wearing a blue hard hat review blueprints on a wooden table in a partially constructed building. The couple looks engaged and pleased as the worker explains the plans, creating a sense of collaboration and excitement about the construction project.

Your Complete Guide to Construction Financing

Ready to build your dream home? Your complete guide to building a home. Johnson Financial Group.

Building the home of your dreams is exciting. The thought of creating a new space designed to your exact specifications – from the size of the rooms to the color of the walls – is thrilling. Yet, just as a solid foundation is important to any well-constructed house, financing is a critical component of the construction process.

In this guide you will learn about:

building a new home vs. buying a new home
documents and information you need for construction financing
tips for building your home
how to select a builder
types of construction financing

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How to Apply

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Documents and Information

Your Social Security number to obtain your credit report
Pay stubs, W‐2s and possibly full tax returns for income documentation
Bank and asset statements for verification of liquid and retirement savings
Any other necessary information based on your individual situation like business tax returns, current real estate holdings, etc.
A lot loan closing statement, if you already own your lot

Additional documents and information (when available)

Accepted offer to purchase – if purchasing the lot at the time of closing on your construction loan
Construction plans
Builder cost breakdown and specs
Complete signed builder contract
Insurance coverage, including builder's risk insurance – prior to closing

How One-Time Close Construction Loans Work

Get pre-approved

Find a knowledgeable construction lender and get pre-approved for your new construction loan.

Select your lot

Find a lot to accommodate the home you want to build. The dimensions, pitch and location can all factor into the size and type of home you want to build.

Select your builder

Educate yourself on the builders in your area by attending home builder shows, talking to vendors or requesting a builder's report.

Submit your contract

Provide your blueprints and the construction contract. The contract should be as detailed as possible and include a spreadsheet itemizing all the costs associated with the construction of your new home.

Close & lock your rate

Plan to close on your construction loan with your loan officer. If you are choosing to request conversion to a fixed-rate mortgage loan, you will be able to lock your rate up to six months before your construction is complete.

Get ready to move

Once the construction phase is complete, the loan may be converted into a fixed-rate mortgage with regular monthly principal and interest payments.

Types of Construction Loans

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A smiling woman with long brown hair, donning a yellow blouse, and a man with a full beard in a light blue shirt with minuscule white dots are clasping hands in a well-lit office, signifying a meeting of minds, an accord, or a business deal. A laptop, partially obscured, is perched in front of the woman, hinting at a professional setting.

This is a combined construction and permanent loan financing option to save you time and money. You’ll enjoy the convenience of one loan, one application and one closing date.

Benefits of a one-time close construction loan include:

Interest only payment during construction based on the funds drawn
Low down payment options
Maximum loan amount up to conforming loan guidelines of $806,500
Option to lock your rate up to 180 days prior to the final draw being made

Two hard-hatted individuals are deep in discussion over plans, huddled around a table within the skeleton of a building in progress. One, a woman with flowing blonde locks, is smartly dressed in a beige blazer and khakis. The other, a Black figure, is donned in a navy jacket with a pop of orange, surveying the documents with equal intensity. The space is raw, with only the bare bones of the structure and the promise of what's to come visible through the expansive windows. The tableau is one of potential, of the excitement that comes with creation.

Our portfolio construction loans provide financing options for homeowners that have high value construction projects that exceed conforming loan amounts.

Benefits of portfolio jumbo construction loans include:

Interest-only payments during construction based on the funds drawn
Loan to values (LTVs) vary, with loan amounts available up to $3,000,000
Long-term fixed rates, generally up to 30 years
Adjustable-rate mortgages (ARMs) with various term options
Once the final draw is made, you may have the option to relock your rate, for a fee, should the current rate be lower

A scenic view of a lush green lawn, bordered by hedges and a backdrop of trees, under an overcast sky.

A lot loan allows you to purchase land before you start construction. Once you’re ready to build, your lot loan can be financed as part of the construction loan.

Lot loan financing benefits include:

Private Mortgage Insurance (PMI) is not required
Finance up to 20 acres
1-2-3 year balloon payment options with longer amortizations

A couple, both smiling, are sitting down. The man, wearing a grey sweater and glasses, is to the left, and the woman, in a pink blazer, is to the right, looking down at the keys she's just been handed. There's a laptop on the table in front of them, and a plant in the corner. The sales representative, with an afro and a light-colored top, is handing over the keys.

In turn-key financing, the builder is responsible for the cost of construction. The homeowner finances the purchase of the new home when construction is complete and they are handed the key.

Benefits of turn-key mortgage financing include:

Homeowner finances the completed project with a traditional mortgage loan
Faster project, typically 4 – 6 months
Less stress and money obligations while your home is being built
Homes typically are built in subdivisions
Flexibility to lock your rate up to 180 days prior to closing for free, should the current rate be lower
Builder is responsible for the construction financing

Construction Loan FAQs

Before your build your new home, review our Construction Financing FAQs so you can be empowered to make the right decisions for you, your lifestyle, family and personal goals.

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Have Questions?

We're here to help.

Give us a call at 888.769.3796

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Loans are subject to credit and property approval, bank underwriting guidelines, and may not be available in all states. Other loan programs and pricing may be available. Conditions, terms, and restrictions, including property and flood insurance, will vary based on loan program selected and property location.

Andrew Dongarra, VP Mortgage Field Manager, Janesville, WI

Your Trusted Construction Loan Officer

Building your dream home is exciting. We can review your goals and develop a personalized plan to help finance your new home.

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