Question 1

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

Accepted Answer

Most lenders require 680 minimum, with 700+ getting better rates. Scores below 680 limit you to portfolio lenders charging premium pricing.

Question 2

How much down payment is required?

Accepted Answer

Expect 20-25% down for construction loans. If you own the land free and clear, equity can sometimes count toward your down payment requirement.

Question 3

Can I act as my own general contractor?

Accepted Answer

Some lenders allow owner-builders with construction experience, but most require licensed contractors. Self-contracting typically increases your required down payment to 30%.

Question 4

How long does construction loan approval take?

Accepted Answer

Plan 60-90 days from application to funding. Lenders review plans, verify contractor credentials, and order appraisals based on future completed value.

Question 5

What happens if construction costs exceed the loan amount?

Accepted Answer

You must cover overruns with cash. Lenders won't increase the loan mid-project, which is why 15-20% contingency reserves are critical.

Question 6

Do construction loans convert automatically to permanent mortgages?

Accepted Answer

One-time close loans convert automatically. Two-time close loans require a full refinance when construction completes, adding closing costs and rate risk.

Construction Loans in Colma: Finance Your Build or Major Renovation