Question 1

How do construction loan draws work in California?

Accepted Answer

Lenders release funds in stages tied to completed work. An inspector verifies each phase before the next draw is issued.

Question 2

Can I use a construction loan to build an ADU in Berkeley?

Accepted Answer

Yes. Many lenders now offer construction loans specifically for ADUs. You'll still need approved plans and a licensed contractor.

Question 3

What credit score do I need for a Berkeley construction loan?

Accepted Answer

Most lenders want 680 or higher. A stronger score gives you access to better rates and more lender options.

Question 4

How long does a construction loan last?

Accepted Answer

Most construction loans run 12–18 months. You pay interest only on drawn funds during that period.

Question 5

What happens when construction is complete?

Accepted Answer

The loan converts to a permanent mortgage, either automatically or through a new closing. This is called a construction-to-perm loan.

Question 6

Do Berkeley's fire zone rules affect my loan?

Accepted Answer

Yes. Hillside fire zone requirements can raise build costs significantly. Lenders account for this in their appraisal and budgeting review.

Construction Loans in Berkeley, CA