Question 1

What is a one-time close construction loan?

Accepted Answer

It combines the construction loan and permanent mortgage into one closing. You avoid a second round of underwriting when the build is done.

Question 2

How do draw schedules work on construction loans?

Accepted Answer

Lenders release funds in stages tied to build milestones. An inspector verifies work completion before each draw is approved.

Question 3

Can I use a construction loan for a major SF renovation?

Accepted Answer

Yes, if the scope qualifies as substantial rehabilitation. Full gut renovations and structural overhauls typically meet the threshold.

Question 4

Do I need a licensed contractor to qualify?

Accepted Answer

Yes. Lenders require a licensed, insured general contractor. Most also review the contractor's financial standing and project history.

Question 5

How long can a construction loan term run in San Francisco?

Accepted Answer

Most construction periods run 12-18 months. SF projects often need the full term given local permitting and inspection timelines.

Question 6

What happens if my build goes over budget?

Accepted Answer

Cost overruns come out of pocket. Lenders won't increase the loan mid-build, so building a buffer into your budget upfront is critical.

Construction Loans in San Francisco: Build or Renovate Right