Conventional Construction Loans
Standard construction-to-permanent financing for building a new home — competitive rates and flexible terms.
Program Overview
Conventional construction loans finance the building of a new home through traditional (non-government) lending channels. Available as one-time close or two-time close structures, conventional construction programs offer competitive rates for well-qualified borrowers. After the construction phase, the loan converts to a standard conventional mortgage.
Who Is This Loan For?
- ✓ Buyers building a new home who do not need VA or FHA
- ✓ Well-qualified borrowers with strong credit and down payment
- ✓ Second-home builders (not eligible for VA/FHA construction)
- ✓ Buyers who want competitive construction rates
Key Benefits
Competitive Rates
Strong pricing for borrowers with 700+ credit and 20% down.
One-Time or Two-Time Close
Flexibility to choose the structure that works best.
Second Home Eligible
Unlike VA/FHA, conventional allows second-home construction.
PMI Removable
Once at 20% equity, no ongoing mortgage insurance.
Qualification at a Glance
General Requirements
- Credit score 680+ (700+ for stronger pricing)
- Down payment 10–20%
- Licensed builder required
- Full income and asset documentation
- Appraisal based on plans and specifications
Advantages
- ✓ Competitive conventional rates
- ✓ One-time close saves money
- ✓ Second home eligible
- ✓ PMI drops at 20% equity
- ✓ Multiple term options
Tradeoffs to Consider
- ↔ Higher credit and down payment than FHA
- ↔ Licensed builder required
- ↔ More documentation than standard purchase
- ↔ Construction timeline restrictions
Common Scenarios
Custom Home Build – Strong Borrower
A borrower with 760 credit puts 20% down on a $500K custom home build. Conventional OTC locks a competitive rate at closing with no PMI.
Documents Typically Needed
- Builder qualifications and license
- Construction plans, specs, and budget
- Standard income/asset documentation
- Appraisal based on plans
Frequently Asked Questions
Most conventional construction programs require 10–20% down. Higher down payments get better rates and avoid PMI.
Broker Disclosure: Scout Financial Group Inc DBA Airus Lending is a licensed mortgage broker (NMLS #2187418) and does not make loans or credit decisions. Airus Lending works with multiple wholesale lenders to help borrowers compare available loan options. Final approval depends on the lender, automated underwriting findings, documentation, state requirements, and overall borrower profile. Not all applicants will qualify.