Residential Construction Loans In Central Virginia
Sometimes you’ll find the perfect home that’s move in ready, while other times, the only way to get what you truly want is to build a new home from the ground up. That’s when you need to secure a residential construction loan.
At First Bank & Trust, we offer flexible financing to cover your home construction needs. Whether you are building in Hanover, Ashland, Mechanicsville or anywhere in Central Virginia, our local lending team is here to answer all your questions and simplify the lending process.
What is a residential construction loan?
A residential construction loan provides you with the funding needed to build your dream home. These loans are short term compared to a traditional home mortgage and the funds are paid out in stages as work is completed on your home.
Residential construction loan vs. home mortgage
While you’re likely familiar with a traditional home mortgage, information about a residential construction loan isn’t generally common knowledge. Here are some primary differences between the two loan types:
| Mortgage | Residential Construction Loan | |
|
Term |
Usually ranges from 15-30 years |
Term can vary based on your building timeline. With residential construction loans, funds are disbursed to you and the builder as progress is made on the home, not all at once like a traditional mortgage. |
|
Purpose |
Purchase a home that is already built or is being built by a construction company, usually in a neighborhood |
Funding to have your home custom built, typically on your own land, through a private construction company you hire |
|
Rates |
Can be fixed or variable depending on your lender |
Fixed rates |
|
Type of loan - secured or unsecured |
Mortgages are secured because your home is used as collateral |
Residential construction loans are unsecured loans since your unfinished home can’t be used as collateral |
|
Repayment |
You pay your mortgage each month after securing the loan |
You pay interest only until construction is complete, then switch to monthly mortgage payments |
How to qualify for a residential construction loan
When applying for a residential construction loan, be prepared to provide the following:
- Construction timeline: What timeline do you have in mind for completing your home construction?
- Realistic budget: Your lender will want to know how much you expect everything to cost, so prepare a realistic budget outlining all costs associated with the project.
- Detailed plans: Along with your budget, have the overall plans for your construction project available so the lender is aware of what is being financed. You will likely be asked to provide plans or blueprints from your builder or architect.
- Traditional mortgage documents: You will also need to provide all the traditional documents you’d submit if you were securing a typical home mortgage including tax returns, bank statements and pay stubs. With a construction loan, your builder may also be asked to provide some financial information.
Residential construction loan resources and tools
Securing a home loan requires support every step of the way. First Bank & Trust is here to help you through all stages, from the loan research phase, to the day you break ground, move into your new home, and beyond. Here are some of our most useful resources and tools to help you through this process.
Frequently asked questions about residential construction loans
Let First Bank & Trust Help You With Your Residential Construction Loan
For more than 40 years we’ve been helping members of our local communities build the home of their dreams. When you’re ready to start building your dream home, the friendly and knowledgeable loan officers at First Bank & Trust are ready to support you.
Get in touch with your local Central Virginia lending team by calling 804-550-5700. Led by Randy Rodgers, our team is here to answer all your questions and help you build the perfect home for your family.
If you are ready to get started with your residential construction loan, simply complete our quick and easy online application.
Apply for your residential construction loan
