Question 1

Can I use a construction loan to buy land in Lompoc?

Accepted Answer

Some lenders bundle land purchase and construction into one loan. Others require you to own the lot first before approving construction financing.

Question 2

How does a construction loan convert to a mortgage?

Accepted Answer

At project completion, the loan either converts automatically or requires a refinance. One-time close skips the second closing entirely.

Question 3

What if my build goes over the timeline?

Accepted Answer

Most loans allow extensions but charge fees. Confirm your lender's policy before signing — Santa Barbara County permits can cause real delays.

Question 4

Do I make payments during construction?

Accepted Answer

Yes, but only on funds drawn so far. Payments are interest-only during the build phase, which keeps costs lower until completion.

Question 5

What builder requirements do lenders enforce?

Accepted Answer

Your contractor must be licensed, insured, and approved by the lender. Most lenders require a signed contract and itemized budget upfront.

Question 6

Is a construction loan harder to get than a purchase mortgage?

Accepted Answer

Yes. Lenders underwrite both you and the project. Stronger credit, more documentation, and larger down payments are the norm.

Construction Loans in Lompoc, CA