Question 1

What credit score do I need for a construction loan in RSM?

Accepted Answer

Most lenders want 680 minimum. Better terms kick in at 720. Rates vary by borrower profile and market conditions.

Question 2

Can I use a construction loan for a major renovation?

Accepted Answer

Yes. Gut renovations and additions qualify. The lender will require a licensed contractor and a detailed scope of work.

Question 3

What is a one-time close construction loan?

Accepted Answer

It combines your construction financing and permanent mortgage into one closing. You avoid paying closing costs twice.

Question 4

How does the draw process work during construction?

Accepted Answer

Funds release in stages as your builder hits milestones. An inspector verifies each phase before the lender releases the next draw.

Question 5

Do RSM HOA rules affect my construction loan?

Accepted Answer

Indirectly, yes. HOA approval delays can push your build timeline and affect rate lock expiration. Plan for it upfront.

Question 6

What happens if construction costs run over budget?

Accepted Answer

You cover overruns out of pocket. Lenders won't increase the loan mid-build. Keep a 10-15% cash contingency ready.

Construction Loans in Rancho Santa Margarita, CA