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San Bruno sits in one of California's most supply-constrained counties. Building new means avoiding bidding wars and creating exactly what you want.
Construction financing works differently than standard mortgages. You draw funds in stages as your project progresses, paying interest only during the build.
With Fed rate cuts expected later this year, construction borrowers may see better permanent loan terms when converting after completion.
Construction Loans in San Bruno
Most construction lenders want 680+ credit and 20-25% down. They scrutinize your builder's track record as much as your financials.
You need detailed plans, permits, and a licensed contractor before closing. Lenders require a fixed-price construction contract with completion timeline.
Expect tighter debt-to-income limits than purchase loans. Lenders calculate qualifying ratios based on your future permanent mortgage payment, not construction draws.
Portfolio lenders dominate construction financing in San Mateo County. Regional banks and credit unions offer more flexibility than national lenders on custom builds.
Single-close construction loans roll building and permanent financing into one approval. Two-close loans require separate applications but give rate shopping options at conversion.
Jumbo construction loans exist but expect stricter terms. Properties over $1.5M in San Bruno often trigger additional reserve requirements and builder vetting.
I lock clients into single-close loans when rates are dropping. Two-close makes sense when we expect lower rates at completion, giving you another chance to shop.
Lenders release funds at inspection milestones. Your builder invoices, the lender inspects, then cuts a check. This protects you but slows cash flow for contractors.
Budget 15-20% above your GC's estimate for contingencies. Lenders won't fund overruns without re-approval, which can stall your entire project mid-build.
Bridge loans fund teardowns fast but require full payoff when construction starts. Construction loans finance the entire build with one approval.
Hard money works for quick lot purchases or projects conventional lenders reject. Rates run 9-12% versus 7-8% for traditional construction financing.
Conventional loans can't touch active construction. You need this specialized financing until the certificate of occupancy is issued and converted.
San Bruno permits move slower than peninsula averages. Plan 4-6 months for approvals before breaking ground, which extends your rate lock timeline.
Hillside lots near Crestmoor trigger geological reports and longer inspections. Lenders add engineering review costs to closing, sometimes $3,000-$5,000.
Builder availability matters here. Top contractors book 8-12 months out, and lenders won't approve loans with unlicensed or poorly rated GCs.
Most lenders offer 6-12 month locks for construction loans. Longer locks cost extra but make sense with San Bruno's permit delays.
Lenders won't automatically fund overruns. You need cash reserves or re-approval, which can take weeks and stall construction progress.
Some lenders allow owner-builders with construction experience. Expect higher rates and larger down payments without a licensed GC.
Yes, lenders order "subject to completion" appraisals based on your plans. The appraised value determines your maximum loan amount.
Interest-only payments begin after your first draw. You pay interest on the outstanding balance until converting to permanent financing.