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Whittier's mix of older homes and infill lots makes construction financing a regular part of our lending pipeline. Buyers tear down post-war bungalows or build on vacant parcels in neighborhoods like Turnbull Canyon and Friendly Hills.
Most construction loans here convert to permanent mortgages after your Certificate of Occupancy. This one-close structure saves time and appraisal fees compared to separate construction and take-out loans.
Rates vary by borrower profile and market conditions. Expect construction-phase interest to run 0.5-1.5% above conventional mortgages, with draws tied to verified completion milestones.
You need 20-25% down on total project cost—land plus build budget. Lenders underwrite you at the permanent mortgage payment, not just construction interest.
Credit minimums sit at 680 for most programs, 720 for competitive rates. You'll also need 6-12 months reserves and detailed plans with contractor bids.
Your builder must be licensed, bonded, and approved by the lender. No owner-builder exceptions unless you hold a general contractor license and prior project history.
Regional banks dominate construction lending in LA County, but their appetite varies wildly by loan size and project complexity. Some cap at $1.5M, others go to $3M.
Credit unions offer competitive rates but move slowly—60-day closings are common. Portfolio lenders close faster but charge more upfront.
We shop your deal across 15-20 construction lenders to find the best draw schedule and rate lock terms. Some lenders float during construction then lock at conversion, others lock upfront.
Most Whittier deals involve replacing a small existing home with something 50-100% larger. Lenders scrutinize your as-completed appraisal hard—inflated valuations kill deals.
Budget 10% over your contractor's estimate for contingencies. Lenders won't increase your loan mid-build, and cost overruns are the number one reason projects stall.
If your lot already has a teardown structure, some lenders require it demolished before closing. Others allow post-close demo if the existing foundation gets reused.
Bridge loans work if you own land free and clear but lack liquidity for a 20% down payment. You borrow against the lot, then refinance into construction financing.
Hard money covers deals conventional lenders won't touch—owner-builders, complex zoning, or tight timelines. Expect 10-12% rates and 2-3 point origination fees.
Jumbo construction loans apply when your total project exceeds conforming limits. Same structure as standard construction loans but stricter reserve and credit requirements.
Whittier's hillside zoning in areas like Turnbull Canyon adds engineering costs and permit delays. Lenders want soils reports and geotechnical clearances before funding draws.
The city's plan check process runs 8-12 weeks for custom homes. Factor this into your construction timeline since most lenders cap interest-only construction periods at 12 months.
Older neighborhoods often lack alley access, complicating material deliveries and increasing site work costs. Lenders sometimes require larger contingency reserves for constrained lots.
Yes, construction-to-permanent loans cover major renovations requiring permits and licensed contractors. Minor cosmetic updates use standard cash-out refinances instead.
Your lender inspects completed work before releasing each draw payment. Expect 5-7 business days between inspection request and fund disbursement to your contractor.
Most lenders allow one 90-day extension with updated appraisal. Beyond that, you may need to refinance into a new construction loan at current rates.
You pay interest-only on drawn funds during construction. Full principal and interest payments start when the loan converts to permanent financing.
Only if you hold an active California contractor's license and demonstrate prior project management experience. Most lenders require licensed third-party builders.
Construction Loans in Whittier