Skip to Main Content

Consider what you need out of your next home– what won’t you compromise on? Maybe you need an accessibility ramp for a family member with mobility trouble, or you simply must have a perfect view of the water. A construction loan from a lender like The Federal Savings Bank can open up those possibilities for you and your family.  

If you are interested in becoming a homeowner, or otherwise acquiring a new home, you really have two options: you can buy or build. Buying your home with the assistance of a purchase mortgage has many advantages, but if you opt to build a home for yourself and your family, then a home construction loan is the way to go. Read on to learn more about the ins and outs of the construction loan approval process. 


Construction Loan Step One: Application 

You may have heard the construction loan process is more involved than other mortgages. This is true, though it depends on what kind of construction loan you get. But all kinds of mortgages start at Step One: Application. At this step, you’ll consult with a loan officer, who will take your application information and inform you of your construction loan options.  

Here are some things you will likely be asked for as part of the construction loan approval process: 

  • Photo ID 
  • Paystubs and W-2s, or your tax returns if self-employed; 
  • Bank statements  
  • Building plans, and an itemized budget for your new home. 

Your builder will need to submit additional documentation, and you will also need to consent to a credit check. Here are some tips for credit repair if you are concerned that your FICO score will not let you qualify for a construction loan. 


Step Two: Underwriting and Final Approval 

It doesn’t matter whether you are acquiring a new lot of land to build on or applying for a construction loan to build on land you already own. If you are approved for a home construction loan, you will likely receive some kind of approval letter from your lender at this step. The letter may come with requests for additional documentation to support the information on your application.  

At The Federal Savings Bank, your loan officer will be there to take your text, call, or email with any assistance you need at this stage of the process. This is what our team does best: guiding our customers quickly to a smooth final approval. 


Step Three: Build Your Home!  

After you close on your construction home loan, your lender will release funds periodically to your builder over the construction period. From there, it’s up to you and your builder to make your housing dreams a reality!  


Next Steps after a Home Construction Loan  

Depending on the terms of your construction mortgage, you may be required to refinance after the construction period in order to avoid high-interest payments. Or if you have opted for a “construction-to-permanent” loan, your home loan might convert to a standard mortgage once the house is built. In this scenario there is no need to refinance- you need only start making payments to your new mortgage lender, the same as if you’d bought your new home. 

Even if you have not identified a builder, it’s a good idea to know where your financing is going to come from. Consider getting started with a member of our team today to evaluate all your financial options. 


Subject to credit approval. Terms and conditions may apply. Property insurance is required on all loans secured by property. 

This information is intended for educational purposes only. Products and interest rates subject to change without notice. Loan products are subject to credit approval and include terms and conditions, fees and other costs. Terms and conditions may apply. Property insurance is required on all loans secured by property. VA loan products are subject to VA eligibility requirements. Adjustable Rate Mortgage (ARM) interest rates and monthly payment are subject to adjustment. Upon submission of a full application, a mortgage banker will review and provide you with the terms, conditions, disclosures, and additional details on the interest rates that apply to you individual situation.