Question 1

What's the minimum down payment for a construction loan in Clayton?

Accepted Answer

Yes — 20% down on the land purchase is the standard minimum. Some lenders require 25% for custom builds above $1,000,000. Your down payment protects the lender during the construction phase.

Question 2

How long does it take to close a construction loan?

Accepted Answer

Expect 45 to 60 days from application to first draw. The timeline depends on builder experience, plan complexity, and appraisal. Permanent financing typically closes 30 days after construction completion.

Question 3

Do I pay mortgage payments during construction?

Accepted Answer

Yes — you pay interest-only on the amount drawn each month. Once construction finishes, the loan converts to permanent financing and you begin principal and interest payments on the full balance.

Question 4

Can I lock in the permanent loan rate now?

Accepted Answer

Yes — most lenders lock your permanent rate at origination. This protects you from rate increases during the 12 to 18 months of construction. The rate applies when the loan converts after completion.

Question 5

What credit score do I need for a construction loan?

Accepted Answer

700 FICO is the typical minimum. Scores below 700 may qualify but with higher rates or stricter terms. Lenders also review your debt-to-income ratio, reserves, and builder experience.

Construction Loans in Clayton: Build Your Custom Home