Question 1

How does a construction loan work in Chico?

Accepted Answer

You borrow in phases called draws, tied to completed construction milestones. At completion, the loan converts to a standard mortgage.

Question 2

Do I pay a mortgage during construction?

Accepted Answer

You pay interest only on funds drawn during the build. Full principal and interest payments start after conversion to permanent financing.

Question 3

Can I use a construction loan to rebuild after a fire?

Accepted Answer

Yes. Butte County rebuilds are eligible. Insurance proceeds can reduce the loan amount needed — coordinate both before applying.

Question 4

What credit score do I need?

Accepted Answer

Most lenders want 680 or higher. Some programs allow lower scores with stronger compensating factors like large reserves.

Question 5

What is a one-time-close construction loan?

Accepted Answer

It combines the construction loan and permanent mortgage into one closing. You lock your rate upfront and avoid a second round of closing costs.

Question 6

How long does a construction loan term last?

Accepted Answer

Build phases typically run 6-12 months. Extensions are possible but cost money — keep your contractor on schedule.

Construction Loans in Chico, CA — Build Smart in Butte County