A construction loan is a short-term loan that provides funds to cover the cost of building or rehabilitating a home.

Construction loans have higher interest rates than longer-term mortgage loans used to purchase homes. The money borrowed through a construction loan is typically provided in a series of advances as the construction progresses. Payments sometimes start on a construction loan six to 24 months after the loan is made.

You can pay off the balance in a lump sum or you may be able to convert the loan to a conventional mortgage loan, though if your construction loan does not automatically convert. You may have to reapply for a new loan. Your choices will depend on your credit history when you apply.

How much home can you afford?

Take the first step and get prequalified.
Call BankIowa Mortgage Center
Come and visit us at