Question 1

How much down payment do I need for a construction loan in Morgan Hill?

Accepted Answer

Most lenders require 20-25% down on the total project cost including land. If you own the lot free and clear, that equity counts toward your down payment.

Question 2

Can I act as my own general contractor to save money?

Accepted Answer

Some lenders allow owner-builders but expect higher down payments, often 25-30%. You'll need to prove construction experience or complete a builder's course.

Question 3

What's the difference between a construction-to-permanent loan and a two-close loan?

Accepted Answer

Construction-to-permanent converts automatically to your mortgage after building. Two-close loans require refinancing, meaning two sets of closing costs but more rate flexibility.

Question 4

How long does construction loan approval take in Santa Clara County?

Accepted Answer

Figure 45-60 days with detailed plans and contractor lined up. Add another month if lenders need to review your builder's credentials or project feasibility.

Question 5

Do construction loans cover permit fees and impact fees in Morgan Hill?

Accepted Answer

Yes, permit costs get included in your construction budget. Morgan Hill impact fees for new construction run $15-25K depending on home size and must be in your loan amount.

Question 6

Can I lock my interest rate during the construction period?

Accepted Answer

On single-close loans, yes. Two-close loans typically float during construction, then lock when you convert to permanent financing upon completion.

Construction Loans in Morgan Hill: Build Your Custom Home in Santa Clara County