Question 1

How much can I borrow for construction in Morro Bay?

Accepted Answer

Lenders finance 75-80% of total project cost including land. Your down payment covers the remaining 20-25% plus a contingency reserve for overruns.

Question 2

What happens if construction takes longer than planned?

Accepted Answer

You pay interest on drawn funds during extensions. Most lenders allow 3-6 month timeline extensions but charge higher rates on the extended construction period.

Question 3

Can I act as my own general contractor?

Accepted Answer

Few lenders allow owner-builder arrangements in Morro Bay. Coastal complexity and permit requirements make licensed contractor mandates nearly universal in our market.

Question 4

When does my rate lock for the permanent mortgage?

Accepted Answer

Rate locks occur at conversion after construction completion. Construction phase rates float, so final permanent rate depends on market conditions when you finish building.

Question 5

Do I make payments during construction?

Accepted Answer

You pay interest only on funds drawn during construction. Full principal and interest payments begin after conversion to permanent financing.

Question 6

What if my project goes over budget?

Accepted Answer

You fund overruns from savings or contingency reserves. Lenders rarely approve mid-construction budget increases without significant additional equity injection.

Construction Loans in Morro Bay: Build Your Coastal Home