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Construction Loan

At Prestian.ai, our Construction Loan offering is designed to help you finance the building of a new home or major property project—with AI-driven underwriting, flexible draw schedules, and personalized risk assessment.

Whether you're buying land and building from scratch or managing a custom build, Prestian.ai connects you to lenders who understand construction finance and helps you make informed decisions.

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Loan Highlights

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Competitive Interest Rates
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Down payments as low as 3%
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Zero Point Loans available
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Must have 2 years verifiable self employment income
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Fixed and Adjustable-Rate Options

What Is a Construction Loan?

A Construction Loan is a short-term financing product used to fund the cost of building a house or major additions/renovations. Instead of providing the full amount upfront, the lender disburses funds in stages—called draws—as construction milestones are completed.
Once construction is done, many construction loans convert into a permanent mortgage (this is known as a construction-to-permanent or “single close” loan).
Because during construction the property is not yet complete, lenders treat construction loans as higher risk and require additional documentation, oversight, and control.
Unlike standard mortgages, you usually make interest-only payments during the build phase, and principal repayment begins after the home is finished.

Benefits of a Construction Loan

Control over your design and quality:
You can tailor every element of your home—materials, layout, finishes—rather than settling for pre-built options.
One financing path from land to mortgage:
With construction-to-permanent loans, you avoid multiple closings and refinancing if you plan ahead.
Pay for construction gradually:
Instead of borrowing the full cost immediately, draws allow you to pay only for work done, which can ease cash flow pressures.
Potential cost savings:
Building new can avoid older home repair costs, and you can choose efficient systems or upgrades from the start.
Prestian.ai’s AI advantages:
We help simulate draw schedules, cost overruns, lender risk exposure, and match you to lenders accustomed to construction financing—reducing surprises and helping you negotiate better terms.
Control over your design and quality:
You can tailor every element of your home—materials, layout, finishes—rather than settling for pre-built options.
One financing path from land to mortgage:
With construction-to-permanent loans, you avoid multiple closings and refinancing if you plan ahead.
Pay for construction gradually:
Instead of borrowing the full cost immediately, draws allow you to pay only for work done, which can ease cash flow pressures.
Potential cost savings:
Building new can avoid older home repair costs, and you can choose efficient systems or upgrades from the start.
Prestian.ai’s AI advantages:
We help simulate draw schedules, cost overruns, lender risk exposure, and match you to lenders accustomed to construction financing—reducing surprises and helping you negotiate better terms.
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Who Qualifies for a Conventional Loan & What Are the Limits?

Who Qualifies

01

Borrowers with a strong credit history, stable income, and existing assets or reserves.

02

People who have a detailed and realistic construction plan with timelines, cost estimates, blueprints, and a licensed builder or contractor in place.

03

Those who own land already or intend to purchase a lot as part of the project.

04

Investors or homebuilders with prior experience or proof of capability to execute projects.

05

Borrowers with sufficient repayment capacity and ability to absorb risk, since construction projects often face delays or cost overruns.

What are the Limits

01

Lenders often set a loan-to-cost (LTC) or loan-to-value (LTV) cap rather than financing 100% of the projected cost. Common limits are 70–80% of the total cost including land and construction.

02

The draw schedule is typically tied to cost milestones, so the project must adhere to budget and timeline to receive future disbursements.

03

Some lenders may limit construction loans to primary residences, not investment properties, though investor construction financing is possible in certain markets.

04

Projects with nonstandard designs, unverified contractors, or high contingency risk may face tougher underwriting, higher interest rates, or require additional reserves or guarantees.

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Credit Score Requirements
Down Payment Requirements

Construction Loan Credit Score Requirements

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Credit Score Requirements

  • Most lenders require a credit score of at least 680 or better to approve a construction loan. Some demand even higher, for example 700 or more, especially for more ambitious or higher-priced builds.
  • Lenders want borrowers with clean credit histories—few delinquencies, reliable repayments, and low default risk.
  • Because construction loans carry additional risk (project delays, cost overruns), credit is more heavily weighted than in standard mortgages.
  • A strong credit score helps reduce the interest rate premium or risk surcharges applied on construction financing.

Construction Loan Down Payment Requirements

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Down Payment Requirements

  • Down payments for construction loans are typically 20% or more of the total project value (land + building cost).
  • In some cases, lenders require 25% to 30% down, especially for more complex homes or riskier projects.
  • If you already own the land, the appraised value of the land may help reduce the equity contribution needed, since the land value counts toward your investment basis.
  • In rare or government-backed programs (e.g. FHA construction loans), down payment percentages may be lower or more lenient in certain settings—but these are more complex and less common.
  • The larger your down payment, the stronger your equity buffer, which reduces lender risk and improves your negotiating position on interest rates and terms.

FAQs on Conventional Loan

How long does a construction loan last, and when does it convert to a mortgage?
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How are draws (disbursements) made during construction?
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What happens if there are cost overruns or delays?
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Can I use construction loans for renovations or additions instead of new builds?
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Are interest rates higher for construction loans than regular mortgages?
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