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Foster City's planned community layout means most new construction happens through teardowns and rebuilds on existing lots. Construction financing here typically runs $2M-$5M given land costs and premium building standards.
Federal rate policy may shift later in 2026, but construction loan rates price off prime plus margin today. Budget for 7-9% during the build phase before converting to permanent financing.
Construction Loans in Foster City
You need 20-25% down plus cash reserves to cover 6-12 months of payments. Lenders want to see strong credit (usually 680+) and debt-to-income under 43% based on your permanent loan payment.
Your builder needs to be licensed and provide detailed plans with engineering stamps. Lenders also require a construction budget with contingency reserves, typically 10-15% over base cost.
Local decision guide
Use this guide to connect construction loans eligibility, lender expectations, and local market factors before comparing payment options in Foster City.
Foster City's planned community layout means most new construction happens through teardowns and rebuilds on existing lots. Construction financing here typically runs $2M-$5M given land costs and premium building standards.
Federal rate policy may shift later in 2026, but construction loan rates price off prime plus margin today. Budget for 7-9% during the build phase before converting to permanent financing.
You need 20-25% down plus cash reserves to cover 6-12 months of payments. Lenders want to see strong credit (usually 680+) and debt-to-income under 43% based on your permanent loan payment.
Local credit unions sometimes offer better construction rates than big banks, but their loan limits may not work for Foster City budgets. We access regional lenders who understand peninsula construction costs.
Most construction loans convert to permanent financing at completion. Locking your end-loan rate upfront costs more but protects you if rates rise during your 12-18 month build.
Foster City's strict design review can add 3-6 months before breaking ground. Factor that timeline into your construction financing since most loans charge fees if you don't start draws within 6 months.
Interest-only payments during construction catch borrowers off guard. On a $3M loan at 8%, expect $20K monthly before your house exists. That's why strong reserves matter more than most applicants realize.
Bridge loans work if you need to buy land or a teardown before selling your current home. Construction loans assume you already own the lot or are buying it with separate financing.
Hard money makes sense for quick teardowns with short timelines, but rates run 10-12%. Construction loans cost less but require more documentation and longer approval windows.
Lagoon-front lots require additional permitting for waterfront construction. Your lender will want proof of flood insurance and engineering reports before funding, which adds cost and timeline.
Foster City's HOA rules affect exterior design choices. Get HOA approval in writing before finalizing plans, since lenders won't fund if your design violates recorded restrictions.
Expect 45-60 days from application to approval. Add another 3-6 months for city design review and permitting before your first draw.
Most lenders require licensed contractors with liability insurance. Owner-builder programs exist but limit your lender options significantly.
You'll need to bring cash to cover overruns. Lenders won't increase loan amounts mid-construction without full reapproval and new appraisals.
Yes, builder's risk insurance covers the structure during construction. Your permanent homeowners policy doesn't activate until you occupy the finished home.
Not during teardown and foundation work. Lenders and insurers prohibit occupancy until inspections pass and temporary certificates of occupancy issue.