A construction loan finances building a new home from the ground up, releasing funds in stages as your builder completes each phase of the project.
Mountain Country Mortgage compares construction lenders on your behalf, so Northern Arizona buyers can build the home they want instead of settling for what is available.
A construction loan is short-term financing that covers the cost of building a home. Instead of a lump sum at closing, funds are drawn in phases as your builder completes different stages of the project.
Most construction loans come in one of two forms. A construction-only loan covers the build and must be paid off or refinanced once complete. A construction-to-permanent loan converts automatically into a standard mortgage once the certificate of occupancy is issued, combining two closings into one.
Interest during construction is typically charged only on the funds drawn, not the full loan amount. Mountain Country Mortgage is a broker, not a lender, and we compare construction programs across our lender network to fit your build.
Parts of Northern Arizona have limited or overpriced existing inventory, especially for buyers wanting a specific lot size, view, or acreage that is hard to find on the resale market.
Buyers who already own land, or who find the right parcel, often prefer building exactly what they want over competing for whatever existing homes happen to be listed.
A family in Chino Valley owned a few acres and wanted more space than anything on the resale market offered. A construction-to-permanent loan funded the build in stages and converted into their mortgage the day the home was finished.
| Requirement | Typical Range |
|---|---|
| Minimum Credit Score | Many lenders look for 680 or higher. |
| Down Payment | Typically 10% to 20%, often higher than a standard purchase. |
| Builder Requirement | A licensed, insured builder, often approved by the lender. |
| Documentation | Detailed construction plans and a fixed-price contract. |
| Land | Must be owned or purchased as part of the transaction. |
| Appraisal | Based on the projected value of the completed home |
Many construction lenders look for 680 or higher.
We review your budget, your land, and your builder before the loan is structured.
Lock in a fixed-price contract with your licensed builder.
We manage the file as the lender reviews your builder, plans, and budget.
Funds release in draws as construction progresses, then the loan converts or is paid off.
A couple of quick stops before you go further, so you walk into your first conversation with a loan officer already prepared.
A plain-English walkthrough of the whole process, from checking your credit to closing day.
See every loan program Mountain Country Mortgage offers, from first-time buyer options to investor financing.
Not necessarily.
In some programs, the land purchase can be wrapped into the construction loan. If you already own the land, that equity may count toward your down payment.
It covers the build phase and automatically converts into a standard mortgage once construction is complete.
This approach involves only one closing, which reduces paperwork and closing costs compared to two separate loans.
You may need to cover the difference out of pocket.
Lenders often require a contingency reserve built into the budget. Accurate contractor bids and a detailed scope of work matter upfront to avoid surprises.
Most lenders require a licensed general contractor.
Owner-builder arrangements are possible with some lenders but are harder to qualify for and typically require documented construction experience.
Typically 6 to 12 months, covering the time needed to complete the build.
If the project takes longer, extensions may be available, though they often come with additional fees.
No.
A construction loan builds a new home from the ground up. A renovation loan improves an existing structure. If you are updating a home you already own or are buying, a renovation loan is the right fit.
Your land equity can often be used as part of your down payment.
Owning land outright can be a real advantage in Northern Arizona, where land and construction costs both run high. Your loan officer will calculate how your land value factors into the loan structure.