How a Construction Loan Can Fund Your New Home

Building your dream home is exciting—but financing it can feel overwhelming. A construction loan can simplify the process and keep your budget on track.

🏗️ Pay as You Build

Funds are released in stages (“draws”) as construction progresses, and you only pay interest on what’s been spent.

Example:

• Home cost: $450,000

• Loan type: Construction-to-permanent, 4 draws

Draws & Interest Payments:

1. Foundation – $100,000 → Interest ~$500/month → Payment: $500

2. Framing – $100,000 → Interest ~$500/month → Payment: $1,000

3. Exterior – $100,000 → Interest ~$500/month → Payment: $1,500

4. Interior Finish – $150,000 → Interest ~$750/month → Payment: $2,250

*Interest-only on funds disbursed. Early payments are low and grow as construction progresses.🏡 Customize Without Compromise

Construction loans let you choose layouts, finishes, and features exactly how you want.

Example:

• Budget-friendly: $25,000 for standard kitchen cabinets and quartz countertops

• Premium: $60,000 for custom cabinets, high-end appliances, and marble countertops

Benefit: You can scale your choices to fit your budget, rather than being limited by existing homes.

💳 Streamline Financing

Many lenders offer construction-to-permanent loans, which convert to a traditional mortgage once your home is complete.

Example:

• Total loan: $450,000

• Interest-only during construction: ~$2,250/month (from example above)

• Post-construction 30-year fixed mortgage at 6%: ~$2,700/month

Benefit: One application, one closing, and no need to juggle multiple loans.

🔒 Budget Control

Lenders require a detailed construction plan and budget, keeping costs predictable.

Example:

• Estimated build cost: $450,000

• Contingency: $20,000

• Lender ensures draws match milestones, so you don’t overspend upfront

Benefit: You see exactly where your money is going at every stage.

🌟 Build With Confidence

Lender inspections and milestone draws protect your investment. You know the home is built correctly before releasing more funds.

Example:

• Milestone inspections: foundation, framing, exterior, interior finish

• Ensures each $100k–$150k draw is earned

Benefit: Peace of mind knowing your money is tied to progress.

Ready to Build Your Dream Home?

A construction loan can make a custom home achievable and stress-free. Vision Construction can guide you through the process and connect you with trusted lenders in Middle Tennessee.

Contact us today to explore financing options and start building your dream home!