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San Jose sits in one of the most expensive housing markets in the country. Building new often makes more sense than overpaying for dated inventory.
Construction loans let you finance the build, then convert to a permanent mortgage at completion. Two loans in one — but only one closing if you structure it right.
680+
Min Credit Score
20-25%
Typical Down Payment
12-18 months
Build Phase Length
Construction-to-Perm
Loan Structure
Variable during build
Rate Type
Construction Loans in San Jose
Most lenders want a 680+ credit score for construction loans. Some go lower, but expect tighter terms and higher rates.
Down payments typically run 20-25%. Lenders treat construction risk differently than a standard purchase. Rates vary by borrower profile and market conditions.
Local decision guide
Use this guide to connect construction loans eligibility, lender expectations, and local market factors before comparing payment options in San Jose.
San Jose sits in one of the most expensive housing markets in the country. Building new often makes more sense than overpaying for dated inventory.
Construction loans let you finance the build, then convert to a permanent mortgage at completion. Two loans in one — but only one closing if you structure it right.
Most lenders want a 680+ credit score for construction loans. Some go lower, but expect tighter terms and higher rates.
Construction lending is specialized. Most retail banks offer it, but their programs are rigid and slow. Wholesale lenders give us more flexibility.
At SRK CAPITAL, we shop construction programs across 200+ lenders. That matters when your build timeline or lot equity doesn't fit a cookie-cutter box.
The biggest mistake I see: buyers locking a rate before their builder has permits. Construction timelines in San Jose routinely run 12-18 months.
Get your contractor approved by the lender early. Lenders vet builders just like borrowers. An unlicensed or financially shaky GC can kill a deal fast.
A bridge loan covers gaps between properties but won't fund a build. Hard money moves faster but costs far more long-term.
Conventional and jumbo loans kick in after construction ends. A construction-to-permanent loan bridges both phases without refinancing.
Santa Clara County permit timelines are notoriously long. City of San Jose can take 6-12 months just for plan approval. Build that into your financing plan.
Lot costs here are significant. Lenders look hard at after-completion value — your appraised ARV needs to justify the full loan amount.
Funds release in draws as construction milestones are hit. At completion, the loan converts to a permanent mortgage.
Yes. ADU construction financing is available and popular in San Jose. Loan structure depends on whether you own the land outright.
Most programs require 680 or higher. Dropping below that narrows your options significantly and raises your rate.
You pay interest only on drawn funds during the build phase. Full payments start when the loan converts at completion.
One loan covers both the build and permanent financing. You lock terms upfront and avoid a second closing after completion.
Most construction periods run 12-18 months. Extensions are possible but may trigger fees or rate adjustments.